ETF Securities has launched Australia’s first ETF providing thematic exposure to companies from across the semiconductor value chain.
SEMI provides passive exposure to the 30 largest semiconductor companies globally.
The ETFS Semiconductor ETF (SEMI AU) has been listed on the Australian Securities Exchange and comes with an expense ratio of 0.57%.
The fund is linked to the Solactive Global Semiconductor 30 Index which selects its constituents from a universe of large and mid-cap stocks listed in developed markets, including South Korea and Taiwan.
The methodology harnesses FactSet’s Revere Business Industry Classification System (RBICS) to screen for firms operating in the semiconductor industry. This includes semiconductor manufacturers as well as companies providing equipment and services within the semiconductor industry.
The 30 largest eligible stocks are selected for inclusion and weighted by float-adjusted market capitalization subject to a 10% cap per security. The index is reconstituted and rebalanced quarterly.
Stocks from the US account for just under two-thirds (62.4%) of the total weight followed by companies from the Netherlands (14.9%), Taiwan (12.6%), and Japan (3.3%). Notable positions include ASML (11.8%), Nvidia (10.4%), Taiwan Semiconductor (9.9%), Intel (7.6%), Broadcom (6.9%), Texas Instruments (6.2%), and Qualcomm (5.7%).
Chip shortage
Index provider Solactive notes that the ongoing semiconductor shortage caught many businesses off guard. Chip production slowed during the global pandemic at the same time that demand for semiconductor technology continues to increase owing to the global 5G rollout, greater interconnectivity, and smarter consumer technology.
This dynamic has led the World Semiconductor Trade Statistics (WSTS) to forecast growth in the semiconductor industry to rise from 6.8% in 2020 to 19.7% in 2021, corresponding to a market size of $527 billion. By 2022, WSTS expects growth to normalize around 8.8%.
Kanish Chugh, Head of Distribution at ETF Securities, said: “We are delighted to have partnered with Solactive to bring to market the ETFS Semiconductor ETF. At ETF Securities we have a focus on identifying and developing products that enable our clients to benefit from rapid technological advances across the globe. Observing the rise in prominence of the semiconductor across a vast array of industries from gaming to automobiles, this product addresses a gap in the Australian market for investors wanting exposure to this growing sector.”
Timo Pfeiffer, Chief Markets Officer at Solactive, added: “Semiconductors serve as the heart and soul of every electric device, and with a growing need for chips to fuel our future smart economy, companies active in this megatrend now are well-positioned for future growth. ETF Securities realized the vast potential of this industry, which will accompany us for the next decades to come. We are excited to be part of this thematic ETF release in Australia, and we look forward to launching more innovative products with ETF Securities soon.”