First Trust Auto ETF Debuts On Tuesday

First Trust, the Illinois-based ETF issuer with 57 funds and $8 billion in assets under management as of the end of April, will roll out the First Trust NASDAQ Global Auto Index Fund on Tuesday May 10. The ETF will trade on the Nasdaq under the ticker “CARZ.” CARZ will track the NASDAQ OMX Global Auto Index and become the first ETF focused on the global automotive industry to come to market. The ETF will feature an expense ratio of 0.7% and Japan, Germany and the U.S. will account for over 70% of its country allocation. South Korea gets a weight of nearly 10%. Germany's Daimler AG is the largest stock holding at 8.28% percent while General Motors GM, Honda HMC and Toyota TM all receive weights above 7%. Ford F gets a weight of 5.67%. Overall, CARZ will feature 32 holdings and will be rebalanced quarterly. To be included in the index companies must have a minimum market value of $500 million and a minimum three-month average daily trading volume of $1 million in dollar terms. “J.D. Power and Associates expects auto sales in the U.S. to reach 13 million units, up 12% from 2010. However, in 2010, for the first time, emerging markets accounted for 51% of global light-vehicle sales, signaling the shift of power in the global automotive market that has been taking place during the past five years. Both China and India ended 2010 with sales of light vehicles up by more than 30%. Momentum in the emerging markets is expected to continue throughout 2011, with China as the driver for global market growth” First Trust said in a statement. An ETF specific to the auto industry has thus far been conspicuous by its absence from the ETF universe, but CARZ may not be alone for long. Earlier this year, Global X also filed plans for an auto ETF of its own. First Trust, which says it is the fastest growing among the top-10 U.S. ETF issuers, has already introduced 14 new funds in 2011, including the suite of nine AlphDEX international ETFs.