Wednesday’s ETF To Watch: NASDAQ Global Auto Index Fund (CARZ)

by on January 4, 2012 | ETFs Mentioned:

Stocks popped to start off the new year, as many investors are hoping for a more stable span of 12 months than was offered in 2011. Last year was plagued by market instability with a number of factors around the world combining to send volatility spiking. But with 2012 starting off strong, the coming year may prove to be much better than the woes that have long been weighing on markets. This week in particular will focus on U.S. economic data as the international space remains relatively quiet until Friday. One of the more significant reports that investors will want to focus on is the motor vehicle sales from December [see also Top 5 Commodity ETFs Of 2011].

The past few months have seen a fair amount of strong data from the US, leading many to believe that we are well on our way to finishing out the recovery and that Europe is one of the only factors standing in our way. The motor vehicle sales report for the previous month will be released later today and should have some dictation over the trading of a number of stocks. The last report came in with 13.6 million vehicles sold, but December is expected to be just shy of that mark, with a total of 13.5 million [see also Where The ETF Money Is Flowing (The Answer Might Surprise You)].

Overall, 2011 saw a marked increase in new vehicle sales from the previous year, with a jump of 15.5%. Though this figure only takes into account newly produced automobiles, it has shed light on buying trends among the consumer sector. Investors should be warned, however, that the outlook for the coming year is not so bright. “The economy is likely to slow down in the first half of the year and Japanese automakers are raising prices on new models, which will affect consumer sentiment this year” noted First Capital.

With this major data release on tap, today’s ETF to watch will be the NASDAQ Global Auto Index Fund (CARZ). This fund seeks to replicate an index that is designed to track the performance of the largest and most liquid companies engaged in manufacturing of automobiles. Though the fund has just 18% of its assets in the US, companies like GM and Ford make up a substantial amount of overall assets. Also note that while many companies are based abroad, the U.S. consumer market is one of the largest in the world, meaning that this report will reach beyond domestic companies. If sales come in as expected, look for CARZ to enjoy a nice trading day, but an unexpected dip could send this young ETF in the gutter for Wednesday’s session [see also Ten New Year’s Resolutions For ETF Investors].

Disclosure: No positions at time of writing.