BlackRock strengthens thematic offering with US manufacturing ETF

Jul 22nd, 2024 | By | Category: Equities

BlackRock has launched a new thematic equity ETF targeting companies poised to benefit from the resurgence of US manufacturing.

BlackRock strengthens thematic offering with US manufacturing ETF

The ETF provides a means for capitalizing on the resurgence of US manufacturing.

The iShares US Manufacturing ETF (MADE US) has been listed on NYSE Arca with an expense ratio of 0.40%.

According to BlackRock, the resurgence of US manufacturing is set to be a significant, multi-year trend driven by supportive policies, supply chain insecurity, geopolitical tensions, and deglobalization.

Recent US policies, including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the Chips and Science Act, have allocated $2.1 trillion to bolster infrastructure and incentivize key industries such as semiconductors to establish domestic manufacturing facilities.

Jay Jacobs, US Head of Thematic and Active ETFs at BlackRock, commented: “Evolving trade relations and a call for enhancing supply chain resiliency have paved the way for the concerted effort across the public and private sectors to re-establish the US as a leader in manufacturing.

“MADE is designed to capture these long-term themes by providing targeted access to companies that could be poised to benefit from supportive policies and secular trends, enabling investors to potentially capture the renaissance in American manufacturing in the convenience of an ETF.”

Unlike traditional sector-based investments, the iShares US Manufacturing ETF includes companies across various sectors such as consumer cyclicals, technology, automotive, defense, and construction. This broad-based approach allows investors to gain exposure within traditional sectors like Industrials or use the ETF as a satellite investment to complement other long-term structural themes, thereby enhancing portfolio diversification.

Methodology

The fund is linked to the S&P US Manufacturing Select Index which selects constituents with a minimum float-adjusted market capitalization of $2 billion and a three-month median daily value traded (MDVT) of $5 million.

To be included in the index, companies must be classified under specific RBICS Focus data categories such as industrial manufacturing, consumer vehicles and parts, and electronics components and manufacturing, Additionally, firms must meet geographical revenue thresholds, with US revenues accounting for at least 50% for industrial manufacturing and consumer vehicles and parts, and at least 25% for electronics components and manufacturing.

Constituents are weighted by their float-adjusted market capitalization, subject to individual stock and group weight caps to ensure diversification. The index is reconstituted and rebalanced semi-annually, with adjustments occurring after the close of the third Friday in June and December.

The index includes 99 constituents, all based in the United States. The top 10 constituents account for 38.4% of the index, with the largest single constituent weighted at 4.3%. Sector allocations are industrials at 65.3%, consumer discretionary at 21.3%, and information technology at 13.4%, reflecting the diversity within the US manufacturing landscape.

MADE presents a direct competitor to the Tema American Reshoring ETF (RSHO US). While both ETFs aim to capitalize on the resurgence of US manufacturing, RSHO takes a distinctive investment approach by focusing specifically on companies that are actively reshoring their operations to the United States. This targeted strategy potentially offers investors exposure to companies with immediate reshoring activities and benefits. RSHO is also listed on NYSE Arca with an expense ratio of 0.45%, slightly higher than MADE’s 0.40%.

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