By on May 12, 2011

There’s an old saying that goes something like: “money talks and bullshit walks.” We don’t necessarily subscribe to it completely here at TTAC, where words pay the bills, but you have to admit that no amount of talk could make the same impact as news that GM’s CEO Dan Akerson has dropped nearly $1m of his own money on GM’s underperforming stock. I bring this up because, for the first time ever, you can now buy CARZ, which in addition to being an awful Sir Mix-A-Lot song is the first-ever auto industry index fund. Specifically:

CARZ is designed to track a basket of reputable car makers in the United States and rest of the globe. The fund’s 30 holdings present as a who’s who of the car industry, with Daimler, Ford, General Motors, Honda and Toyota comprising the top five positions. Together, these and the rest of CARZ’s top 10 holdings represent close to 60% of its assets

But, while it’s one thing for a CEO to bet on his own company (or anyone to bet on any company they believe in), investing in the industry at large is a very different gamble. Which raises an interesting question: having destroyed billions of dollars of value in recent decades, and proved itself to be vulnerable to all kinds of unpredictable events in the shorter term (think: recalls, credit crunches and and tsunamis), is the auto industry as a whole really worth gambling on? I’m not sure I’m entirely convinced…

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6 Comments on “Want To Own The Auto Industry? Now You Can…...”


  • avatar
    Xeranar

    This sounds like a comfortable long-term fund. While the auto industry has a great deal of short-term setbacks and the domestics have faltered in the most recent decade the auto industry as a whole is a comfortable slow-medium growth industry and is not anywhere close to a real collapse in value. Now that GM has been shrunk the biggest danger in the portfolio is shored up. If I had the kind of money this fund requires (I know, it’s probably more reasonable than I think) I would jump on it. Grab it in the recession so in a few years when we climb out of this hole I’ll be riding high on ridiculous stock prices. Material goods manufacturers have proven unless outmoded to be much more resilient than others.

    • 0 avatar
      MRL325i

      It’s an index fund. You can buy one share if you want to. Closed today at about $30.

      • 0 avatar
        Xeranar

        Yeah I figured it was priced for the self-investor since large investors can grab up the choicer parts. Still as an index stock it’s pretty rock-solid because in most years the auto industry does fine, it flows more with the economy but it won’t tank like tech or some other possibly outmoded industry can.

  • avatar
    charly

    Oil is an issue for the auto industry but that is true for the whole economy so the only real differentiator with the rest of the economy is how successful electrification is because the auto industry doesn’t make them

  • avatar

    I guess it’s designed for the long term minded investor. And frankly the hope to draw more investors on main street into the investment world. It seems to me there is a trend toward this kind of “basket” fund in the investment community because it’s hope to mitigate losses. The truth is most of us on main street think the whole investment community is rigged against us in the first place. So for me it’s a no go.

  • avatar
    NormSV650

    Backed by the Government, how could you go wrong?

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