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CARZ And Global Auto Outlook: Week Ending March 2, 2018

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Lighthouse Research


  • CARZ ETF was down 2.87% during the week as a result of significant diesel-related regulatory pressure and potential trade war talks.
  • Trump's tariff  threat and German court decision on diesel ban made shares go down.
  • VW reported good annual results, while PSA Group turned to have excellent 4Q and its shares are up by 6.3% over the week.
  • Following sluggish performance this Monday, Auto sector started recovery on Tuesday as trade war fears eased.

Dear Readers,

We will publish Global Auto Outlook on a regular basis. The Outlook will be based on First Trust NASDAQ Global Auto Index Fund (NASDAQ:CARZ). To the best of our knowledge, this is the only Auto ETF available for domestic US investors. Despite its liquidity and market cap being rather small, one can use CARZ as a proxy for the overall industry as it covers all major OEMs globally. In the Outlook we plan to cover industry-related news, corporate news, provide analysis and insights on coming events.

Why we do this? In our view, Automotive is one of the most undervalued industries with high potential. On the other hand, there is an intense regulatory pressure, especially in Europe right now, which may pose a risk for further recovery. In addition, the transition from ICE vehicles to EVs is underway. As a result, there are many things going on in Automotive industry right now, making it the subject of our industrial coverage.

CARZ ETF overview

As usual, we start from short introduction of the ETF and its underlying.

CARZ ETF represents securities of a wide range of countries (see Figure 1) and has exposure to 6 different currencies (see Figure 2).

Figure 1. Country exposure

Source: Fidelity Investments

Figure 2. Currency exposure

Source: Fidelity Investments

Listing of all underlying shares is available at the link: First Trust NASDAQ Global Auto Index Fund

Since its launch in 2012, CARZ ETF price has gone up 75.5%, which is close to iShares MSCI World ETF's (URTH) growth of 74.5%, as one can see from Figure 3. The dynamics of CARZ ETF price, however, was less smooth as a result of emission scandals, regulatory overhang and fears of China and global economy deceleration. As global economy started to get pace in the beginning of 2016 and dieselgate scandal seemed

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We are research team that covers wide spectrum of financial assets in USA, Europe and across emerging markets. We primarily focus on short-to-medium duration bonds and event-driven equity strategies.Recently, our team decided to publish some of our Fixed Income/Event-Driven investment insights here on Seeking Alpha. Our goal is to represent ourselves to different kind of investors as well as attract attention of larger financial institutions for future cooperation.We are committed to provide you only the best ideas, insights and analysis.We also welcome your feedback on our investment insights as well as your own ideas!Feel free to subscribe to our channel and use our knowledge and experience for making return on your own investments. Welcome to LHC Management consultancies!Disclaimer: please note that provided views and materials cannot be classified as investment recommendations from legal point of view. Provided insights must not be used on their own for making investment decisions. Investors are recommended to do their own research and consult with their broker(s)/investment advisor(s) prior to making a trade. Investing in financial assets always poses a risk of capital loss.

Analyst’s Disclosure: I am/we are long DDAIF, VLKAF, FCAU, PEUGF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

This one sure seems like a bag holder recruitment exercise to me - kind of like the "Uncle Sam Wants You" posters. Nothing about the fundamentals or technical of these names that suggests buying them - any of them. Everything about them smells like garbage looking for a home.
Goof comment. Thank you.
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