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Using ETF's to Invest in Autos

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  • Description

    Ryan Issakainen of First Trust Advisors breaks down how to invest in the auto sector using ETF's.

  • Duration 3:28
  • Date

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Okay US competition for April sales.

-- and increase in auto sales for eleven months now in a -- Optimistic news but they aren't the only ones feeling get about car sales our next guest says the worst days for the auto industry appear to be behind that's.

Joining us now is rising highs -- first trust.

Advisories look TF strategy ETF that's the theme -- supporting your idea is can -- use ETFs to invest in autos and would you again what do you think it what's the best best strategy.

Yeah well we believe that the recovery in the US auto market continues.

And there's a lot of opportunity around the world especially when you consider the emerging market demand.

From a consumer that didn't exist before we actually run -- ETF the ticker symbol is CAA RZ cars.

And that invests in 36.

Auto manufacturers from around the globe.

How we expect this can this recovery in auto sales to continue.

-- there's a lot of pent up demand from the last few years and we expect that you know even despite a lackluster recovery.

Despite high unemployment rate consumers are buying autos so why did you -- ETF rather than just buying the stocks directly.

Yeah well NE TF provides you diversification.

-- in our case among 36 companies and if you look at the sales results even today.

Chrysler was up 20%.

GM and Ford were down on Volkswagen was up.

This is it just -- an efficient way to get exposure to the industry and again we believe that consumers.

Less leveraged than they've been a long time you look at financial obligations ratio.

It's as low as it's been since 1984.

Banks are more willing to -- to consumers.

There's just a lot of ingredients.

And we knowingly -- right approach is a good way to do that.

-- guess is we're looking at the chart you said some -- -- data looks like a Washington fact that chart sort of reflects that the stock is basically flat on the day.

So so why do you TI has yet.

Yeah I mean you're looking at -- it's basically flat it's up eleven cents and you're saying half -- -- half or down.

So it seems like the average of the industry is sort of nothing -- buying ETF may -- you know does go anywhere.

Well the ETF diversify -- your risk as well as diversify his the intraday move from day today.

We believe that this is a recovery.

That will benefit the entire auto industry.

Not just one or two companies you may see fluctuations from one day where one company's a winner one day and then a loser the next but again this is a way to provide diversification.

And by the way it's another.

There are other uses -- ETFs for example you could use this as a long hedge to a short position for an auto stocks that someone thought was maybe overpriced.

What's your outlook then for the -- -- ETF how much upside then say for the duration of the year.

Well so far were up about 20% year to date so we have had a nice advance and we have outperformed the S&P by a pretty wide margin.

But we do expect auto sales to continue we expect and annual rate of about fourteen point seven million units.

In terms of -- a price target we don't have anything that set we like to rely on the financial advisor community to really figure out.

An investor's portfolio where this best fits.

But we do think that there's upside in especially from a long term standpoint for the auto industry -- Brian thanks so much.

Great to -- with.

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