Bumpy September for auto ETFs as UAW strike, higher rates weigh

Oct 4 – Exchange-traded funds tracking automakers saw net outflows last month on worries over the United Auto Workers’ (UAW) strike against the “Detroit Three” and higher interest rates.

Production at General Motors (GM), Ford (F) and Chrysler parent Stellantis (STLAM) have taken a beating as the UAW strike headed into the 20th day.

The USD 41.2 million First Trust Nasdaq Transportation ETF – that counts GM among its top holdings – saw net outflows of USD 11.6 million last month, compared with outflows of USD 3 million in August, according to Lipper data.

“Investors are being cautious about holding automaker stocks right now given the uncertain outcome and length of the strike,” said Bryan Armour, director of passive strategies research for North America at Morningstar.

“The redemption of ~20% of the (First Trust) ETF’s net assets in mid-September could have been related to the UAW strike, although it’s tough to say with certainty.”

JPMorgan has estimated a hit to operating profit of USD 191 million for GM and USD 145 million for Ford in the third quarter from the strike.

The bigger USD 719.63 million Global X Autonomous & Electric Vehicles (DRIV), where the three affected carmakers make up just 5% of the portfolio, saw net outflows of USD 12.3 million in September, improving from outflows of USD 59.3 in the prior month.

The First Trust fund fell 4.4% last month, while the Global X fund was down 5.7%.

EV-focused funds remain quite depressed, although that’s been the case for some time, said Todd Sohn, ETF and technical strategist at Strategas Securities.

“Rate pressure is definitely an agitation, and the recent strike just adds to heap.”

Funds tracking Tesla (TSLA) also failed to draw inflows last month despite hopes that the strikes would help the EV maker expand its market share.

The USD 1.02 billion Direxion Daily TSLA Bull 1.5X Shares ETF saw its first month of outflows in four.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Anil D’Silva)