---
title: "Defiance's new foundry ETF and AI Magnificent 10 are mostly swaps"
url: "https://etf.net/news/defiance-s-new-foundry-etf-and-ai-magnificent-10-are-mostly-swaps-2026-09-28"
published_at: "2026-09-28T16:20:38.659Z"
updated_at: "2026-09-28T16:20:38.659Z"
byline: "ETF.net Research"
---

# Defiance's new foundry ETF and AI Magnificent 10 are mostly swaps

The Defiance Global Foundries ETF AIFR and the Defiance AI Magnificent 10 ETF AIMG started on September 9, hold $263,411 and $504,510, and charge 0.71% and 0.61%.

By ETF.net Research. Published Sep 28, 2026.

Defiance listed two small funds on the Nasdaq on Wednesday, September 9: the Defiance Global Foundries ETF AIFR, aimed at companies that make chips for others, and the Defiance AI Magnificent 10 ETF AIMG, a list of ten companies tied to artificial intelligence. Both hold the stocks mostly as swaps, contracts that pay a stock's return without the fund owning the shares.

Two much larger funds already hold semiconductor companies as shares. The VanEck Semiconductor ETF SMH holds those companies and the equipment firms that supply them, has $74.6 billion, and charges 0.35%. The iShares Semiconductor ETF SOXX holds the 30 largest U.S.-listed semiconductor companies, has $48.2 billion, and charges 0.33%.

AIFR holds $263,411 and charges **0.71%**, just over twice the fee SMH charges. The summary prospectus, dated Tuesday, September 1, says the cost inside the swaps is not included in that figure, so the stated fee is not the full cost. AIMG holds $504,510 and charges **0.61%**, against 0.35% for SMH.

Intel was the largest holding in SOXX as of Friday, September 25, at 10.2%. It is also the largest line in AIFR, at 21.5% as of Sunday, September 27, and AIFR holds that stake as shares. An owner of SOXX already has the company this foundry fund leans on hardest.

Six of AIMG's ten names were in SMH's top ten that Sunday: Nvidia, Taiwan Semiconductor, Broadcom, Micron, SK hynix and Marvell. SMH owns them as shares. AIMG holds all ten of its names as swaps.

## A foundry screen wide enough for Intel

AIFR seeks to match the MarketVector Global Foundries Index before fees. A company can get in if at least half its revenue comes from making chips for others, or if that work brings in at least $2 billion a year, so the fund is not limited to pure foundries. Defiance's prospectus, dated Friday, August 28, says the index weights the names by free-float market value, the value of shares the public can trade, and caps any one name at 20% only when it resets those weights, once a quarter.

As of Sunday, Intel, Samsung, Taiwan Semiconductor and United Microelectronics were 76% of the fund. Intel was held as shares. The other three were swaps, and swaps in total were 61%.

Chart: Intel sits **above** AIFR's 20% reset cap

Defiance says AIFR is the first U.S.-listed fund dedicated to semiconductor foundries, from its own review as of Thursday, September 3.

Sylvia Jablonski, Defiance's chief investment officer, said in the announcement on Thursday, September 10 that the market "has spent three years pricing the companies that design chips" and that "in 2026, the constraint moved to the companies that make them."

## Ten names, held through swaps

AIMG seeks to match the BITA AI Magnificent 10 Select Index before fees. The prospectus says the index ranks an eligible universe by free-float market value, takes ten names, and weights them equally, but only at the reset, after the close on the second Friday of January, April, July and October. The next reset is in October.

Until then the weights drift, and the fund holds most names through three swap contracts, so a buyer is depending on more than one other party to pay the stock's return.

Chart: Micron is **12.2%** of AIMG; Coherent is 7.7%

The prospectus dated Tuesday, August 4 listed that eligible universe as of that date, not as a fixed portfolio: Nvidia, Broadcom, Alphabet, Taiwan Semiconductor, Samsung, SK hynix, Micron, Marvell, Lumentum and Coherent. New listings that fit can be added, so the universe can change. The September 27 holdings are swaps on those same ten.

In the other announcement on Thursday, September 10, Jablonski said the Magnificent Seven "gave investors a shorthand for the last cycle's leaders" and called this list "the hardware underneath this one." Alphabet is one of the ten.

The prospectus says the fund may use swaps and options extensively so it can qualify as a regulated investment company. The U.S. tax code limits how much a fund with that status can invest in a small number of issuers, and the prospectus says that limit is largely why the swaps are there. It also says financing and other costs of the swaps can lower the return.

The largest holding is a government money-market fund, at 18.2%, set against a cash debit of 18.1%. The two largely cancel, so the stock exposure is the swaps.

Average daily turnover is $55,745 in AIFR and $146,361 in AIMG, against $263,411 and $504,510 in the funds. As of Friday, September 25, Defiance put the median gap over 30 days between the buying price and the selling price at 0.13% for AIFR and 0.20% for AIMG.

The shared names are already available as shares, at 0.35% in SMH and 0.33% in SOXX. These two funds add a foundry screen and a ten-name weighting rule, delivered mostly through swaps, at a higher fee. For a buyer who can already hold the shared names as shares, we do not see either new fund as the better way to own those companies.

Source: etf.net, https://etf.net/news/defiance-s-new-foundry-etf-and-ai-magnificent-10-are-mostly-swaps-2026-09-28. Please cite the page URL.