Strong gains by Iran’s automotive-focused Behin Khodro Sector Fund

Despite challenges within Iran’s vehicle industry, the Persian nation’s first automotive-focused fund has chalked up an impressive 30.39% share price gain by the 10^th December 2025 – considering this ETF was launched only in September last year. 

This ETF has attracted investments more from retail investors as it provides access to the automotive sector with minimal initial capital and has higher liquidity compared to individual stocks, Dr Hamid Farooghi, co-founder of the fund manager Vista Portfolio Management, told IFN Investor. 

The investor pool also includes institutions plus some foreigners, noted Hamid. “They invest in automotive sector funds for reasons such as reducing liquidity risk, hedging risk and benefiting from a balanced and optimized automotive portfolio.” 

Complying with regulations issued by the Securities and Exchange Organization of Iran, this ETF invests a minimum 70% of its NAV within the automotive sector equities. The rest can be in other asset types – including equities from other industries, precious metals, fixed-income securities and derivatives – to increase the fund’s asset diversification for risk mitigation. 

The Behin Khodro Sector Fund follows Shariah guidelines – it does not invest in a company where the debt exceeds 33% of its NAV. The companies should also not be involved in activities such as financing automobile sales, explained Hamid. 

Still, the fund’s portfolio must include two industry giants – Iran Khodro and SAIPA, which account for 60% of the sector’s total market value and hold a significant weight in the sector index – even though both have been making losses in recent years, due to the state-controlled nature of Iran’s economy. 

To mitigate the negative financial impact, “we use fundamental and technical analysis to identify other top-performing automakers and parts manufacturers and invest the remaining assets in them to maximize returns for investors”. 

On prospects, Hamid said future returns in this sector depend on macroeconomic reforms – where the price liberalization could affect production volumes, reduce the accumulated losses of major automakers and support the introduction of new products aligned with modern technologies. 

“Gasoline-powered vehicles still hold around a 95% market share in Iran, and the country lags behind global trends. Factors such as limited investment, lack of charging infrastructure and energy price controls contribute to this gap. However, there is a gradual and modest growth observed in the electric vehicle segment.”