VanEck unveils Europe’s first dedicated semiconductor ETF

Dec 4th, 2020 | By | Category: Equities

VanEck has rolled out an ETF across major European exchanges that provides pure-play exposure to companies operating within the semiconductor industry. It becomes the continent’s first ETF to specifically target chip manufacturers such as Nvidia, Intel and AMD.

VanEck unveils Europe’s first dedicated semiconductor ETF

Martijn Rozemuller, Head of Europe at VanEck.

The VanEck Vectors Semiconductor UCITS ETF has listed on London Stock Exchange in US dollars (SMH LN) and pound sterling (SMGB LN) and in euros on Deutsche Börse Xetra (VVSM GY) and Borsa Italiana (SMH IM).

The vehicle provides comparable exposure to that offered by the highly popular and liquid VanEck Vectors Semiconductor ETF (SMH US), its US-domiciled counterpart. The Nasdaq-listed fund houses in excess of $4 billion in assets.

The European domiciled ETF tracks the MVIS US Listed Semiconductor 10% Capped Index, a proprietary index developed by VanEck’s indexing division, MV Index Solutions.

The index selects US-listed companies with market capitalizations above $150 million that derive at least 50% of their revenue from the production of semiconductors and semiconductor equipment. Constituents are weighted by market capitalization subject to a cap of 10%. The index is rebalanced on a semi-annual basis.

According to VanEck, the strategy provides indirect exposure to a broad range of technology-related themes as microchips are an essential component of many next-generation innovations such as cloud computing, artificial intelligence, robotics, cybersecurity, and autonomous driving.

It says that the market for semiconductors is expected to grow at around 5% per annum over the next five years with global annual revenue expected to reach $730bn by 2026.

The ETF currently has 25 constituents. Major positions include ASML (10.3%), Taiwan Semiconductor (10.2%), Qualcomm (9.3%), Nvidia (8.6%), Texas Instruments (8.5%), Intel (8.4%), Broadcom (6.7%), Advanced Micro Devices (5.9%), Micron Technology (4.6%), and Applied Materials (4.0%).

Martijn Rozemuller, European Head of VanEck, commented, “Microchips are an elementary component of the high-tech industry. They are used in technical components such as computer chips or microprocessors, and our modern world would be inconceivable without them. With the growing use of modern technology in business and everyday life, the demand for and significance of more powerful microchips is increasing.”

Dimitri Klymenko, Product Manager at VanEck, added, “The MVIS US Listed Semiconductor 10% Capped Index on which the ETF is based has been established as a pure-play index. This means that only those companies will be included that derive at least 50% of their revenues from semiconductors and semiconductor equipment. This allows investors to invest in this industry in a very conscious and targeted manner.”

The ETF has been seeded with $5m and comes with an expense ratio of 0.35%. Income is capitalized.

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