New ETF targets semiconductor market
The new chip ETF will trade on the NYSE around March 30
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Columbia Threadneedle Investments has filed a prospectus with the Securities and Exchange Commission for a new exchange-traded fund that aims to offer investors exposure to the semiconductor market.
The Columbia Seligman Semiconductor and Technology ETF (SEMI) will invest at least 80% of its net assets in securities of semiconductor, semiconductor equipment and related technology companies.
Companies included in the fund must have at least 50% of revenues, sales, earnings or assets arise from or be dedicated to the design, development, manufacturing process, distribution or sale of semiconductors, other integrated circuits (ICs) or semiconductor equipment.
They may also include companies that primarily internally source or develop their own semiconductors, ICs or semiconductor equipment for its technology products.
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Unlike traditional ETFs, the Columbia Seligman Semiconductor and Technology ETF will not disclose all the assets it holds each day. However, it will publish a daily "tracking basket" on its website that includes some of its holdings. The fund, which is non-diversified, will generally hold between 30 and 50 securities.
It will also include a "tracking basket weight overlap," which discloses the percentage weight overlap between the holdings of the prior day's tracking basket compared to the holdings of the fund that form the basis of its calculation of net asset value per share at the end of the prior business day.
The advantage of keeping certain information about the ETF secret is that other traders will be unable to predict or copy the investment strategy, potentially resulting in improved performance. However, the ETF disclosing less information may result in investors having to pay more money to trade its shares and the ETF's price not matching the value of its portfolio.
The Columbia Seligman Semiconductor and Technology ETF is expected to become available to the public on or around March 30 on the New York Stock Exchange.
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The ETF comes as the world continues to feel the pain from an ongoing semiconductor chip shortage, which some industry leaders have said could stretch into 2023.
Commerce Secretary Gina Raimondo (AP Photo/Charles Krupa, File)
Commerce Secretary Gina Raimondo continues to point out that American chip production has dropped to 12% with the bulk, or 90% of the most innovative chips, made in Taiwan.
This as she and others call on Congress to pass the Bipartisan Innovation Act, which would invest $52 billion in domestic semiconductor production, innovation and advanced manufacturing, as well as create the United States' first Supply Chain Resilience Office.
The hearing entitled "Developing Next Generation Technology for Innovation" will examine the correlation between American competitiveness and semiconductors, the impact of vulnerabilities in U.S. semiconductor supply chains and the importance of CHIPS legislation.
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Intel has announced a more than $20 billion investment to build two chip factories in Ohio, including a $100 million investment over the next decade to build a pipeline of talent and support semiconductor industry research, education and workforce development across the United States.
The factories are expected to create 3,000 high-tech jobs and 7,000 construction jobs as well as support tens of thousands of additional long-term jobs across a broad ecosystem of suppliers and partners.
Micron is also investing $150 billion globally over the next decade in memory manufacturing, research and development, including a potential United States fabrication plant expansion.