Concerns over the United Auto Workers (UAW) strike against the "Detroit Three" and increased interest rates drove net withdrawals from exchange-traded funds tracking automakers last month. As the UAW strike entered its 20th day, production at General Motors, Ford, and Chrysler parent Stellantis suffered. According to Lipper statistics, the $41.2 million First Trust Nasdaq Transportation ETF, …
Concerns over the United Auto Workers (UAW) strike against the “Detroit Three” and increased interest rates drove net withdrawals from exchange-traded funds tracking automakers last month. As the UAW strike entered its 20th day, production at General Motors, Ford, and Chrysler parent Stellantis suffered.
According to Lipper statistics, the $41.2 million First Trust Nasdaq Transportation ETF, which has GM among its top holdings, witnessed net withdrawals of $11.6 million last month, compared to outflows of $3 million in August.
“Investors are being cautious about holding automaker stocks right now given the uncertain outcome and length of the strike,” said Morningstar’s director of passive strategies research for North America.
JPMorgan estimates that the strike will cost GM $191 million in operational profit and Ford $145 million in the third quarter. The larger $719.63 million Global X Autonomous & Electric Vehicles, in which the three impacted carmakers account for only 5% of the portfolio, experienced net outflows of $12.3 million in September, down from $59.3 million the previous month. Last month, the First Trust fund declined 4.4%, while the Global X fund plummeted 5.7%.
EV-focused funds remain down, as they have been for some time, according to Todd Sohn, ETF and technical strategist at Strategas Securities.
“Rate pressure is definitely an agitation, and the recent strike just adds to heap.”
Money tracking Last month, Tesla also failed to attract inflows, amid anticipation that the strikes would help the EV firm increase its market share. The Direxion Daily TSLA Bull 1.5X Shares ETF, worth $1.02 billion, saw its first month of outflows in four years.
Risk disclaimer:
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.
