REX's new chip fund holds suppliers the U.S. semiconductor ETFs leave abroad
The REX AI Chipmaking ETF, CHIP, charges 0.65%, and REX said on Wednesday, September 23 that only about a third of its index has a primary U.S. listing.
Key takeaways
REX Shares launched the REX AI Chipmaking ETF, CHIP, on Wednesday, September 23. It holds the companies that supply chip manufacturing, including suppliers listed abroad that U.S. semiconductor funds are not built to hold.
REX describes it as the suppliers chip makers buy from, not the designers and not the factories. A company gets into the VettaFi AI Chipmaking Index only if more than half its revenue comes from one of three segments, as the September 21 prospectus defines them. Wafer fabrication equipment is the machinery that builds silicon wafers. Advanced packaging is high-tech semiconductor assembly, not the machines. Metrology is the testing and measurement used to check yields.
At each quarterly reset the index puts 50% in wafer equipment, 25% in advanced packaging and 25% in metrology, and no stock can weigh more than 5%.
On launch day, REX said only about a third of the index has a primary U.S. listing, and that U.S.-listed shares alone would leave roughly two-thirds of it out. The firm was citing VettaFi weights as of Monday, August 31. As of Wednesday, September 30, VettaFi put Japan at 27% of the index.
The fund's book shows those names. As of Sunday, October 4, Tokyo Electron, a Japan-listed wafer-equipment company, was 5.3%, just above the 5% limit that applies at the quarterly reset. Advantest, classified as metrology in the index, was 4.9%.
ASE Technology, in advanced packaging, was 5.0%. BE Semiconductor is in that segment too. Disco and ASMPT were in the top 12.
REX reported $803,100 in the fund, and 30,000 shares outstanding, as of Thursday, October 1.
What you may already own
A holdings comparison covers 27 of CHIP's 56 holdings, 56.6% of its weight. The share below is of that part, not of the whole fund, and a shared company counts at the lower of the two weights.
The Invesco and Corgi fees are as of Sunday, October 4. The iShares fee is from its current prospectus. VanEck states its fee on its fund page.
PSI has the most weight in common with CHIP, and it is still 30 U.S. semiconductor companies. A Japan-listed stock is outside what that fund holds.
EUV is run by a manager. It owns chip-making tools, lasers and optical networking, and it also holds chip manufacturers. As of Sunday, October 4, Taiwan Semiconductor was 11.2% of the fund, which held $479 million. The holdings that day did not include Tokyo Electron, Advantest, Disco, BE Semiconductor or ASMPT.
SOXX and SMH track U.S.-listed semiconductor companies. The largest holding in SMH is Nvidia, a chip designer. VanEck's country list for SMH, as of Wednesday, September 30, showed no Japan.
CHIP charges 0.65%, 0.32 percentage points more a year than SOXX. Applied Materials, Lam Research and KLA are each just over 5% here and just under 4% in SOXX. The extra fee sits against those heavier weights, and against the foreign names the U.S. funds are not built to hold.
ETFs in this story
Frequently asked questions
What does CHIP hold?
It holds suppliers that get more than half their revenue from wafer fabrication equipment, advanced packaging or metrology, not designers and not factories.
How much of the index lacks a primary U.S. listing?
REX said only about a third has a primary U.S. listing, so U.S.-listed shares alone would leave roughly two-thirds of the index out.
Do SOXX and SMH hold these foreign suppliers?
Both track U.S.-listed semiconductor companies, and VanEck's country list for SMH as of September 30 showed no Japan.
What does CHIP charge?
The fund charges 0.65%, 0.32 percentage points more a year than SOXX.
