China's best-known chipmaker is not in Europe's first fund dedicated to Chinese chipmakers. Three companies that make printed circuit boards are in it.
VanEck has brought its China semiconductor strategy to Europe as a UCITS fund, a sibling of the US fund of the same ticker. It holds 25 companies, charges 0.65% a year, and requires each of them to earn at least half its revenue from making semiconductors or the equipment used to make them. Italian press coverage of the launch called it the first UCITS ETF devoted entirely to the Chinese microchip industry, and noted that VanEck suggests a holding period of ten to fifteen years.
The interesting part is the list. On the US twin's holdings page, the top position is Cambricon at 10.53%, followed by Hygon and Naura. Hua Hong is the only foundry, at 3.81%. Semiconductor Manufacturing International Corporation, the company most people would name first if asked about Chinese chips, does not appear at all. VanEck explains this in one line: the index “excludes sanctioned companies by design”.
What fills the space is instructive. WUS Printed Circuit, Victory Giant and Avary Holding together make up 14.19% of the fund, and all three build the boards that chips are soldered onto. Presumably they clear the revenue test because the index reads the supply chain generously. They are also among the most liquid names in a market where liquidity decides who gets in.
The US launch press release had a quote from VanEck that sums it up: “Most investors think they own semiconductors, but what they own is the incumbent supply chain.” The fund certainly changes that. Investors now get a different supply chain, minus its best-known foundry and plus a fair amount of fibreglass.
Eventide's two new ETFs share a prospectus, a faith-based screen and two portfolio managers, who have simply swapped seats. Dolores Bamford leads the dividend fund with Andrew Singer alongside. Singer leads the large-cap fund with Bamford alongside. Both funds screen for values “inspired by the Christian faith and rooted in a biblical worldview”, which covers everything from avoiding gambling, tobacco and alcohol to “protecting children from violent forms of entertainment”.
I recently wrote about a Catholic values fund whose exchange page talked only about carbon. Eventide does not have that problem. The faith comes first in the screening section, and the environment comes fifth.
I also recently noted that GMO had launched an ETF share class that cost more than its mutual fund. Eventide has done the reverse. The Dividend Growth mutual fund's Class N shares show net expenses of 1.15%, including a 0.20% distribution fee. The ETF charges a unified fee of 0.95%, which is that same number with the distribution fee taken out.
The Large Cap Focus ETF is cheaper again at 0.75%, and has the more relaxed definition of its own name. At least 80% goes into companies the size of those in the Bloomberg US 500, but the fund may also hold private companies, up to a 15% limit on illiquid holdings. A large-cap fund that can buy companies with no market capitalisation at all is a small theological puzzle of its own.
When Mackenzie launched its Modus range of rules-based factor ETFs, it came with global, international and global small-mid cap versions, at 0.55% to 0.60%. The press release promised value, momentum, quality and low volatility, with limited bias towards size, liquidity, country and sector, and investment “rather than relying on manager judgment”. Emerging markets was the obvious gap.
The gap has now been filled, without any fanfare. We could find no announcement from Mackenzie. The fund is simply trading, which for a range whose whole selling point is that nobody needs to make a decision feels entirely in character.
There is not much to say about it, and that is the point. It applies the same four factors as its siblings to a different corner of the world, at what will presumably be a similar price, and no one involved has a view on what happens next.