On Wednesday, VanEck launched the VanEck Fabless Semiconductor ETF (SMHX), the latest player in a roster of thematic equity ETFs.
SMHX seeks to generate similar price and yield results to the MarketVector US Listed Fabless Semiconductor Index. The fund has a net expense ratio of 0.35%.
The index is cultivated to look at the performance of fabless companies within the semiconductor industry. Fabless companies zero in on designing and developing chips while outsourcing production operations. Eligible companies within the index must generate at least half of their revenue from the fabless semiconductor industry.
As of July 31, 2024, the index holds 22 securities. These companies hold market caps ranging between $2.88 trillion and $1.19 billion.
Per the fund prospectus, SMHX primarily invests in companies within the index. SMHX may invest in small-, medium-, or large-cap semiconductor design companies. In terms of global exposure, the fund may invest in companies based outside of the U.S., including emerging markets.
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“The global semiconductor space has been going through a transformational period in recent years, as demand has spiked alongside advancements in generative AI and other fast-moving technologies. Despite recent volatility, there remain a number of tailwinds for the industry, including the CHIPS Act,” noted VanEck Associate Product Manager Nicholas Frasse. “While the Act is primarily aimed at increasing manufacturing capacity in the U.S., it bolsters the ecosystem fabless companies rely on.”
Due to the fund’s indexing strategy, SMHX does not seek to outperform the index that it tracks. Additionally, the fund will not use defensive positions that are incongruent with the SMHX’s goal of tracking the index.
SMHX is not the first VanEck fund to provide targeted exposure to the semiconductor industry. Launched back in 2011, the VanEck Semiconductor ETF (SMH) has over $22 billion in assets under management. As of July 31, 2024, SMH’s NAV is up over 40% year to date.
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