BlackRock has launched a new thematic equity ETF in Europe providing global exposure to companies operating in the semiconductor industry.
The fund is the first ETF in Europe to offer global exposure to the semiconductor theme.
The iShares MSCI Global Semiconductors UCITS ETF has been listed on Euronext Amsterdam in US dollars (SEMI NA) and on Xetra in euros (SECO GY).
Semiconductors play a critical role across the electronics value chain, and their importance is only expected to grow in an increasingly digital global economy.
As the fourth most-traded product globally – after crude oil, refined oil, and automotive vehicles – semiconductors are core enablers of the data revolution and are at the forefront of innovative technologies and services.
The fund will become just the second ETF in Europe to target the semiconductor industry following the December 2020 launch of the VanEck Vectors Semiconductor UCITS ETF (SMH LN). This fund has quickly found its footing with assets under management already exceeding $720 million less than eight months after its debut.
The VanEck ETF, however, invests exclusively in US-listed semiconductor companies. With more than a third of the iShares ETF’s exposure currently dedicated to stocks listed outside of the US, it too may find an audience, particularly from investors seeking greater diversification or global exposure to the semiconductor theme.
Methodology
The ETF is linked to the MSCI ACWI IMI Semiconductors & Semiconductor Equipment ESG Screened Select Capped Index which is based on the MSCI ACWI universe covering large and mid-cap stocks across 23 developed and 27 emerging markets globally.
Index construction involves screening for securities that are classified to either the semiconductor or semiconductor equipment industries according to the Global Industry Classification Standard (GICS).
A sustainability screen removes violators of UN Global Compact principles, companies associated with tobacco or weapons, and firms that derive significant revenue from thermal coal, oil sands extraction, and thermal coal-based power generation.
Constituents are weighted by float-adjusted market capitalization subject to an 8% cap on the largest five companies and a 5% cap on any other firm.
As of the end of July, the index contained 234 constituents with two-thirds (65.0%) of the index by weight allocated to stocks from the US and the next largest country exposures being Taiwan (13.8%), the Netherlands (8.7%), Japan (4.8%), and South Korea (2.3%).
The split between companies assigned to the semiconductor and semiconductor equipment industries was approximately 75% to 25%. Notable positions included Nvidia (9.1%), ASML (7.9%), Taiwan Semiconductor (7.0%), Broadcom (6.5%), and Intel (6.4%).
The fund comes with an expense ratio of 0.35%, matching the price tag on VanEck’s fund. Income is accumulated within the portfolio.
Due to the sustainability screening, the ETF is classified as Article 8 under the European Union’s Sustainable Finance Disclosure Regulation.