There has been much optimism in the auto industry because of the “CASH FOR CLUNKERS” program. This government stimulus program has proved to be quite successful. The initial response to the program was so vast, that the program recently ran out of the allotted $1 Billion budget. With the program off to a great start, government officials are scrambling to put together an additional $2 Billion into the stimulus package.
The ETF industry currently does not have an automotive exchange traded fund (ETF). With the auto industry buzzing for clunkers, you would think an automotive ETF would be well received. While we don’t think you could create an ETF with just US based automakers. A global automotive based ETF would peak interest across the globe. In an ETF like this you could include automakers like Toyota (TM), Ford (F), Volkswagen (VOW.DE), Honda (HMC), Peugeot (UG.PA), Fiat (F.MI), Hyundai, Nissan, and General Motors. This ETF could also include some of the top parts suppliers from across the world to diversify it’s basket of stocks.
The closet thing we found to this idea would be the Fidelity’s Select Automotive Portfolio (FSAVX). This is a mutual fund that invests in companies principally engaged in the manufacture of automobiles, trucks, specialty vehicles, parts, tires, and related services. But, again it’s a mutual fund. Also, the RevenueShares Large Cap ETF (RWL) has about 3% exposure in Ford, but that is the only automaker in the ETF.
So with consumers rushing to trade in their clunker, investors are looking to cash in with an automotive ETF. Can we bring attention to the ETF sponsors to create such an ETF? A global automotive based ETF would make the best sense for the future.