The auto theme doesn’t have many products; the only one CARZ just attracted $18.12 million since the inception in 2011. It’s a global automakers fund. In another word, it has big stakes in the brand-name companies that manufacture the cars you see on the road—Toyota, Daimler, etc.—but no positions in the upstream part suppliers and accessory manufacturers. Nearly 80% of the fund is allocated to American, German, and Japanese automakers. CARZ charges 70 bps for this exposure, but the strategy still appeals to some people. The fund is fairly diversified globally but light on emerging markets in general.
CARZ tracks NASDAQ OMX Global Auto Index, which is based on ICB system under the code 3353 as Automobile Manufacturer. Back in 2011, when the fund just started, top holdings are Daimler Ag, For Motor Co, General Motors Co, Toyota Motor Corp, Honda Motor Co, Hyundai Motor Co, Kia Motors Corp, Volkswagen Ag, Bayer Motor Werks, and Nissan Motor Co. While the holdings today as of March 2017 are: Daimler Ag, Honda Motor Co, Ltd, Toyota Motor Corp, General Motors Co, For Motor Co, Hyundai Motor Co, Suzuki Motor Corp, Tesla, Inc, Nissan Motor Co. Ltd, Bayer Motor Werks, Fuji Heavy Industries Ltd. We see Volkswagen and Kia were displaced by Suzuki and Tesla now. Even Tesla is added, the index doesn’t catch up with the new theme of “driverless” automobile manufacturing. “Driverless” cars, or Autonomous cars are equipped with top-notch sensors and software to detect environment so there is no need for a chauffeur to sit behind the wheel.
Seeing it as an unavoidable future path, the unconventional car makers such as Google parent Alphabet Inc. has carved out a driverless unit – Waymo and is hiring rental car company Avis Budget Group Inc. to build up a network of taxi services without drivers. Apple is working with Hertz to test out self-driving vehicles (http://www.cnbc.com/2017/06/26/hertz-shares-soar-after-report-apple-working-to-manage-small-autonomous-fleet.html). Let alone to mention that conventional and giant car manufacturers such as Volvo, BMW, Ford are also trying hard to forge into this space. Limited by the industry classification system ICB, the automobile manufacturer sector 3353 doesn’t have the capacity to include this technology element into auto maker grouping, hence, investors who want to exploit the auto future with driverless concept need to find other products, which leave an ample room for indexer/ETF issuers to fulfil this demand.
Now let’s take a close look at CARZ’s performance, comparing it to the benchmark – MACI world index, using the iShares MSCI World ETF (NYSEARCA: URTH) as a comparison.