Coming off a year in which in U.S. automobile sales climbed 13
percent, sales are expected to rise again in 2013 as the U.S. and
global economies recover. More fuel-efficient vehicles and
fresher styles are among the catalysts that some analysts see as
driving robust auto sales this year.
"Our fundamental outlook for automobile manufacturers is
positive," said S&P Capital IQ in a research note. "We see
U.S. automotive demand trending higher on a year-over-year basis.
Sales should benefit from widespread availability of and lower
cost of credit for consumers. In addition, sales should benefit
from an aging vehicle fleet that needs to be replaced and by
consumers' desires for newer, more fuel efficient vehicles,
and/or fresher styles and the latest in-vehicle technology."
That optimism has been reflected in the recent returns of
major auto stocks. In the past 90 days, shares of Ford (NYSE:
F
), the second-largest U.S. automaker, have surged almost 24
percent. Shares of rival General Motors (NYSE:
GM
) are up more than 13 percent over the same time period.
Despite history of the automobile business in the U.S. and the
industry's importance to the economy here, there is just one ETF
devoted to the sector. That fund is the First Trust NASDAQ Global
Auto Index Fund (NYSE:
CARZ
), which S&P has a Marketweight rating on.
CARZ, which debuted in May 2011, is reflective of the auto
industry in that the ETF is global in its composition. Japan
accounts for nearly 37 percent of the ETF's country weight with
the U.S. and Germany combing for more than 34 percent. Germany
and South Korea round out the fund's top-five country exposures
and it is the global nature of CARZ that is worth keeping an eye
on this year.
"While we expect to see uneven geographic progress, including
declines in Europe and weakness in South America, we look for
global demand to rise in 2013, led by China and the U.S. General
Motors and Ford should see material losses again in 2013 from
suffering European operations," said S&P Capital IQ. "We
expect global sales volume growth to be in the low to mid-single
digits in 2013. We think higher volume in the U.S. and abroad
versus 2012 will outweigh European challenges, helping industry
profits and cash flows."
S&P Capital IQ has four-star ratings on Ford and GM, the
largest and tenth-largest holdings in CARZ, respectively. Other
top-10 holdings in CARZ include Honda (NYSE:
HMC
), Toyota (NYSE:
TM
) BMW and Harley-Davidson (NYSE:
HOG
).
Regarding CARZ, S&P Capital IQ said: "When it comes to
Performance Analytics, it is ranked overweight relative to other
equity
ETFs
ranked by S&P Equity Research. However, based on Cost Factors
it is categorized as underweight. Based on Risk Considerations it
is ranked marketweight."
CARZ, which has $10.5 million in assets under management, has
an expense ratio of 0.7 percent. The ETF has gained about 21.5
percent in the past three months.
For more on ETFs, click
here
.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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