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Auto Industry ETF: What It is, How It Works, Example

By
Adam Hayes
Full Bio

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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Updated December 17, 2023
Reviewed by Julius Mansa
Fact checked by Jiwon Ma
Part of the Series
Types of ETFs Explained
What's an ETF
  1. Exchange-Traded Fund (ETF) Types and Benefits Explained
  2. 6 Common ETF Types for Your Portfolio
  3. An Inside Look at ETF Construction
  4. Custom Basket ETFs
  5. Single-Stock ETF Definition
  6. Passive ETF: What It Means, How It Works
  7. Actively Managed ETF: Meaning, Overview, Limitations
Types and Details
  1. Index ETF: Definition, Types, Advantages, and Risks
  2. Smart Beta ETF: Definition, Types, Example
  3. Diamonds ETF: Meaning, Popularity, Statistics
  4. No-Fee ETF: What It Means, History, Criticism
  5. Dividend ETF: What it Means, How it Works
  6. Value vs. Growth ETFs: How Do You Choose?
  7. Benefits and Risks of Thematic ETFs
  8. Factor ETFs: Meaning, Effectiveness, Examples
  9. Benefits of a Covered Call ETF
  10. Leveraged ETFs: The Potential for Bigger Gains—and Bigger Losses
  11. Ultra ETF: What It Means, Benefits, Limitations
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  1. ETFs For Sector Rotation Strategies
  2. What Is a Sector ETF, How Do You Invest in One?
  3. Services Sector ETF: Meaning, Examples, Pros and Cons
  4. Airline Industry ETF
  5. Auto Industry ETF: What It is, How It Works, Example
    CURRENT ARTICLE
  6. What Common ETFs Track the Banking Sector?
  7. Which Leveraged ETFs Track the Banking Sector?
  8. Biotechnology ETF: What It Is and How To Invest
  9. Communication Industry ETF Definition
  10. Food Industry ETF: What It is, How it Works, Pandemic Impact
  11. Gaming Industry ETF: What It is, How It Works, Examples
  12. Insurance Industry ETF: Meaning, Example, Pros and Cons
  13. Retail Industry ETF: What It is, How It Works
Real Estate and Specialty ETFs
  1. A Look at One of the Largest Sustainable Investing ETFs
  2. ETFs for the Driverless Car Revolution
  3. Emerging Market ETF: Meaning, Pros and Cons
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  5. REIT ETF: What it is, How it Works, Special Considerations
Currency Funds
  1. Currency ETF: Meaning, Special Considerations, Examples
  2. How Currency-Hedged ETFs Work
Inverse ETFs
  1. Inverse ETF: Definition, Comparison to Short Selling, and Example
  2. Inverse ETFs Can Lift a Falling Portfolio
  3. The Risks of Investing in Inverse ETFs
Auto Industry ETF Auto Industry ETF

Investopedia / Candra Huff

What Is an Auto Industry ETF?

The auto industry ETF is an exchange-traded fund that invests primarily in manufacturers and suppliers of automotive products. An ETF is a type of security that tracks an index or sector and can be purchased or sold on a stock exchange like regular stock shares.

Key Takeaways

  • An auto industry ETF is an exchange-traded fund that tracks the stocks of the auto industry.
  •  The auto industry includes companies that manufacture cars, trucks, vans, and commercial vehicles. It also includes companies that supply automobile parts. 
  • ETFs are traded like other types of securities that track an index or sector.
  • Asia and Europe, along with the U.S., have a strong market presence in the auto industry. 
  • The only exclusive auto industry ETF currently available trades under the ticker symbol CARZ.

Understanding Auto Industry ETFs

The automotive industry ETF consists of a group that contains manufacturers of all automobile-related products, including but not limited to parts and labor. Due to the number of automotive companies within the United States and across the globe, many of these exchange-traded funds may have a global reach. Asia and Europe both have a strong market presence in the industry. 

Some of the products held in these funds include research and development, distribution of materials, and the sale of automobiles themselves.

In a bull market, automotive stocks rank higher as they are tied to development and production in the economy by showing increased consumer spending. New automobiles are a significant purchase that many people put off until they are financially stable enough to do, so thanks to the increasing availability of other options.

Example of Auto Industry ETF

The First Trust Nasdaq Global Auto Index Fund ETF (CARZ) remains the only exchange-traded fund that is focused exclusively on the auto industry sector, only investing in companies that are classified as auto manufacturers. CARZ is managed by First Trust Portfolios L.P.; and while First Trust is a U.S based company, the fund is global and not limited to investing in securities located within the United States. The ETF was first created in 2011 and carries an expense ratio of 0.70%.

CARZ's portfolio only includes companies with more than a $500 million market cap and also requires that included securities meet the minimum three-month daily trading average of at least $5 million, and these securities must be listed on an index-eligible stock exchange. CARZ currently has 101 equities in their group that meet this standard.

Most urban areas have extensive public transportation systems. Even rural areas are now seeing an increase in newer transportation initiatives like ridesharing and companies like Uber and Lyft that provide taxi services where they did not previously exist or greater demand for them.

First Trust NASDAQ Global Auto Index Fund (CARZ) Top 10 Holdings (Q4 2023)
Company Name (Ticker) Percent of CARZ Assets Description of Company
Advanced Micro Devices, Inc. 5.33% Information Technology
Microsoft Corporation 4.66% Information Technology
Taiwan Semiconductor Manufacturing Co., Ltd. 4.62% Information Technology
Samsung Electronics Co., Ltd. 4.57% Information Technology
Apple, Inc. 4.55% Information Technology
NVIDIA Corporation 4.34% Information Technology
Tesla, Inc. 4.08% Consumer Discretionary
Alphabet, Inc. (Class A) 3.97% Communication Services
Intel Corporation 3.42% Information Technology
Toyota Motor Corporation 2.97% Consumer Discretionary
First Trust NASDAQ Global Auto Index Fund (CARZ) Top 10 Holdings (Q4 2023)
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. First Trust Portfolios. “First Trust S-Network Future Vehicles & Technology ETF (CARZ).”

  2. First Trust Portfolios. "First Trust NASDAQ Global Auto Index Fund," Page 2.

  3. First Trust Portfolios. "First Trust NASDAQ Global Auto Index Fund," Page 1.

  4. First Trust Portfolios. “First Trust S-Network Future Vehicles & Technology ETF (CARZ).”

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Part of the Series
Types of ETFs Explained
What's an ETF
  1. Exchange-Traded Fund (ETF) Types and Benefits Explained
  2. 6 Common ETF Types for Your Portfolio
  3. An Inside Look at ETF Construction
  4. Custom Basket ETFs
  5. Single-Stock ETF Definition
  6. Passive ETF: What It Means, How It Works
  7. Actively Managed ETF: Meaning, Overview, Limitations
Types and Details
  1. Index ETF: Definition, Types, Advantages, and Risks
  2. Smart Beta ETF: Definition, Types, Example
  3. Diamonds ETF: Meaning, Popularity, Statistics
  4. No-Fee ETF: What It Means, History, Criticism
  5. Dividend ETF: What it Means, How it Works
  6. Value vs. Growth ETFs: How Do You Choose?
  7. Benefits and Risks of Thematic ETFs
  8. Factor ETFs: Meaning, Effectiveness, Examples
  9. Benefits of a Covered Call ETF
  10. Leveraged ETFs: The Potential for Bigger Gains—and Bigger Losses
  11. Ultra ETF: What It Means, Benefits, Limitations
Equity Funds
  1. ETFs For Sector Rotation Strategies
  2. What Is a Sector ETF, How Do You Invest in One?
  3. Services Sector ETF: Meaning, Examples, Pros and Cons
  4. Airline Industry ETF
  5. Auto Industry ETF: What It is, How It Works, Example
    CURRENT ARTICLE
  6. What Common ETFs Track the Banking Sector?
  7. Which Leveraged ETFs Track the Banking Sector?
  8. Biotechnology ETF: What It Is and How To Invest
  9. Communication Industry ETF Definition
  10. Food Industry ETF: What It is, How it Works, Pandemic Impact
  11. Gaming Industry ETF: What It is, How It Works, Examples
  12. Insurance Industry ETF: Meaning, Example, Pros and Cons
  13. Retail Industry ETF: What It is, How It Works
Real Estate and Specialty ETFs
  1. A Look at One of the Largest Sustainable Investing ETFs
  2. ETFs for the Driverless Car Revolution
  3. Emerging Market ETF: Meaning, Pros and Cons
  4. The Vegan ETF - All About How the VEGN Fund Works
  5. REIT ETF: What it is, How it Works, Special Considerations
Currency Funds
  1. Currency ETF: Meaning, Special Considerations, Examples
  2. How Currency-Hedged ETFs Work
Inverse ETFs
  1. Inverse ETF: Definition, Comparison to Short Selling, and Example
  2. Inverse ETFs Can Lift a Falling Portfolio
  3. The Risks of Investing in Inverse ETFs