Global markets still lacking a global automotive ETF

Exchange Traded Funds (ETF) cover just about every industry and sector except the one that is growing by leaps and bounds in emerging markets - the global auto industry.
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Think about it. We have ETFs representing literally everything else from airlines, gaming, media to timber, water, oil, natural gas, wheat, corn and gasoline.

All we have that's chartable is the Dow Jones Wilshire U.S. Automobile & Parts Index ($DWCAUP) - shown above as a monthly chart dating back to 2006.

Yet, there is nothing that is all inclusive, to properly track the global auto industry, a major contributor to the global economy.

Consider Turkey

Here is a successful Muslim nation and part of NATO. It has an auto industry. In fact, experts agree that the Turkish auto market may produce 1 million units this year alone.

According to todayszaman.com, a Turkish website, the Anatolia news agency reported that Indian Tata’s Turkey distributor reiterated that the increasing demand and low interest on car loans boosted vehicle sales in Turkey. It also broke an all-time record of 730,000 units in 2010.

Point is, Turkish economy is one of the fastest-growing economies in the world, and the automotive market is expected to with it.

Moreover, interest rates are low while national income per capita is rising over time. In line with these developments, Egypt would be wise to emulate the Turkish model if it truly wants a better lifestyle for its citizens.

Global Auto Industry

Turkley is just one global example outside of China and India. Fact is, the auto industry is no longer just American, European and Asian. It’s growth is not a dead cat whose bounce will only happen once either. It’s gone global and it‘s dynamically growing.

The electrification of the automobile alone has the potential to change energy use, not only in America and Europe, but everywhere around the globe; and the interest in investment is there.

Investors may have avoided adding auto exposure to their retirement portfolios these past few years, but Ford, Toyota and Honda charts look far more appealing than Walmart stock.

Moreover, more than Americans love their cars, and investors around the globe have the same demands and expectations. They, too, prefer investing in companies or sectors whose operations and products they understand and may have a relation; and automobiles are easy for them to understand and invest.

All have as a tracker is the MSCI U.S. Investable Market Automobiles & Components Index. It is a market capitalization-weighted index of stocks designed to measure the performance of Automobiles & Components companies in the MSCI U.S. Investable Market 2500 Index. No mention of non U.S. companies.

Fidelity, on the other hand, has an actively-managed mutual fund benchmarked to this index. It is called the Select Automotive Portfolio (FSAVX). And seeking alpha.com wrote a year ago that the holdings of this fund would be a good starting point for a global ETF. because

After all, it includes companies like Toyota (NYSE: TM), Honda (NYSE: HMC), Volkswagen (VLKAF.pk), Nissan (NSANY) and others; like India’s Tata Motors and China’s “Big-5”.

So, until we get a global auto ETF, we can track the via the Dow Jones Wilshire U.S. Automobile & Parts Index ($DWCAUP), shown above as a monthly chart dating back its beginning in 2006.

Disclosure: Frank Sherosky, creator of the chart and author of "Awaken Your Speculator Mind" does not hold any stock or option positions in this index at this time.

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About the Author: After 39 years in the auto industry as a design engineer, Frank Sherosky now trades stocks and writes articles, books and ebooks via authorfrank.com, but may be contacted here by email: [email protected]

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