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

FILE PHOTO: Striking United Auto Workers (UAW) members from the General Motors Lansing Delta Plant picket in Delta Township, Michigan U.S. September 29, 2023. REUTERS/Rebecca Cook/File Photo

(Reuters) - 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, Ford and Chrysler parent Stellantis have taken a beating as the UAW strike headed into the 20th day.

The $41.2 million First Trust Nasdaq Transportation ETF - that counts GM among its top holdings - saw net outflows of $11.6 million last month, compared with outflows of $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 $191 million for GM and $145 million for Ford in the third quarter from the strike.

The bigger $719.63 million Global X Autonomous & Electric Vehicles, where the three affected carmakers make up just 5% of the portfolio, saw net outflows of $12.3 million in September, improving from outflows of $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 also failed to draw inflows last month despite hopes that the strikes would help the EV maker expand its market share.

The $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)

Follow us on our official WhatsApp channel for breaking news alerts and key updates!


Next In Tech News

Self-proclaimed bitcoin inventor lied 'repeatedly' to support claim, says UK judge
Ukraine's Kyivstar allocated $90 million to deal with cyberattack aftermath
Kirin's electric spoon leaps from Ig Nobel infamy to the dinner table
Google invests 1 billion euros in Finnish data centre to drive AI growth
Microsoft to unveil AI devices and features ahead of developer conference
Paris vies for Europe's AI crown as key conference beckons
‘Grand Theft Auto VI’ release set for late 2025
TikTok parent ByteDance now has China’s most popular AI chatbot
Things to know about an AI safety summit in Seoul
Venture capital investment in crypto picks up after long decline

Others Also Read