Samsung Asset Management Hong Kong (SAMHK) has launched a new equity ETF providing global exposure to companies operating within the semiconductor industry.
The fund is the first ETF in Hong Kong to provide global exposure to the semiconductor investment theme.
The Samsung Bloomberg Global Semiconductor ETF (3132 HK) has been listed on the Stock Exchange of Hong Kong and comes with a management fee of 0.85%.
Ongoing charges are estimated to be 1.80% per annum.
Semiconductor companies have outperformed the broader growth-oriented equities market in the post-Covid environment.
The $9.0bn iShares Semiconductor ETF (SOXX US), which focuses on US-listed semiconductor companies, has surged 200% between 20 March 2020 (when the US equity market bottomed out) and 8 November 2021. This compares to a gain of approximately 130% for the Nasdaq 100 over the same period.
Production disruptions caused by Covid-19, combined with increased orders for semiconductors due to accelerating digitalization, also driven by the pandemic, has led to a supply-demand imbalance and driven up the value of chips. Analysts expect the current supply chain issues to last until at least mid-2022.
Looking over the long-term, the semiconductor industry is expected to continue benefitting from several tailwinds including the global 5G rollout, greater interconnectivity, and smarter consumer technology.
This dynamic has led World Semiconductor Trade Statistics (WSTS), a non-profit industry observatory, 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%.
Carmen Cheung, Head of ETF and Passive investment at SAMHK, said: “We aim at providing high-quality ETF products that meet the need of the market, and the shortage of the global semiconductor industry and Metaverse concept have become hot issues in the high-tech field.
“The Samsung Global Semiconductor ETF adopts a global investment strategy, enabling investors to participate in a wide range of stock markets where those leading semiconductor companies are listed.”
Methodology
The Samsung Bloomberg Global Semiconductor ETF tracks the Bloomberg Global Semiconductor Top 20 Index which consists of the 20 companies, selected from both developed and emerging markets globally, that derive the highest total revenue from semiconductor-related businesses.
Eligible business activities, as defined in Bloomberg’s Industry Classification Standard (BICS), include semiconductor manufacturing as well as the provision of equipment and services within the semiconductor industry.
Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 15%. The index is reconstituted and rebalanced semi-annually.
As of the end of August, over half (52.1%) of the index was allocated to stocks classified within the semiconductor devices industry and a further third (34.5%) to semiconductor manufacturers. The remaining weight was allocated to the communications equipment (9.2%) and consumer electronics (4.2%) industries.
The top ten stocks accounted for 81.8% of the total weight. They were Nivida (16.3%), Taiwan Semiconductor (14.3%), ASML (10.5%), Samsung Electronics (9.7%), Intel (6.7%), Broadcom (5.9%), Texas Instruments (5.4%), Qualcomm (5.0%), Advanced Micro Devices (4.1%), and Sony (3.9%).
While the fund is the first ETF in Hong Kong to offer global exposure to the semiconductor investment theme, the Global X Asia Semiconductor ETF (3119 HK) targets Asia-based companies involved in the production and development of semiconductors and semiconductor equipment. This fund, which launched in August 2021, tracks the FactSet Asia Semiconductor Index and comes with an annual expected ongoing charge of 0.68%.