In America, Defiance sells a fund whose whole purpose is to leave out seven companies. In Europe, it has now listed a fund named after them.
Defiance Mag7 UCITS ETF (MAGZ, London Stock Exchange)
The US fund is the Defiance Large Cap ex-Mag 7 ETF. It holds 494 large American companies and deliberately excludes Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla, for a gross expense ratio of 0.35%. At launch its chief executive explained that even clients who believed the seven would keep growing had “seen their portfolios become engulfed by these companies”.
The European fund is called Mag7.
What it does with the seven is harder to say. There is a perfectly coherent reading of all this. A firm that sells the cure can also sell the condition, and between them the two funds let a client decide exactly how engulfed to be. That is a product range rather than a contradiction.
It does mean that an investor holding an S&P 500 tracker, XMAG and MAGZ would own the Magnificent Seven, then not own them, then own them again. The net position is left as an exercise for the reader.
Canary Staked INJ ETF (INJC, Nasdaq)
Most crypto ETFs hold a token. This one puts every unit of it to work. The fund page shows 100.00% of its INJ staked, which is ahead of the filings, where the promise was at least 90%.
Staking is run by Luganodes, custody by BitGo, and the sponsor fee is 1.10%. Rewards are not paid out to holders. They are folded into the daily NAV, after staking fees that Canary says are shared between the sponsor, the staking providers and the custodians. The rewards, in other words, pass through three sets of hands before they reach the fourth, which belongs to the investor.
The page also carries the standard reminder that the fund “is not a commodity pool or an investment company registered under the Investment Company Act of 1940”. It is an ETF in the sense that it trades on an exchange. Everything else about it is a staking operation with a ticker.
Harvest STAR Chip ETF (3559, HKEX)
Hong Kong investors can now buy a Shanghai chip fund that is not offered to them. The Harvest STAR Chip ETF puts at least 90% of its assets into the Harvest SSE STAR Chip ETF in Shanghai, a master fund that is not authorised by the Hong Kong regulator and will not be sold directly to the Hong Kong public. The feeder is the authorised way in.
The index holds the 50 largest STAR Market chip companies, caps any one at 10% and is more than 95% semiconductor. Its constituents can move up to 20% in a single day, which is worth knowing before buying something described as a one-stop solution for sector allocation.
The press release is headed “Embracing the Semiconductor Supercycle” and notes that the index has risen more than 200% since its base date. The word supercycle appears once, in the headline, and then not again; that is interesting positioning.
American Century Emerging Markets Insights ETF (ACEM, Nasdaq)
I recently described an emerging markets fund that holds three stocks from a 22-country universe and has promised not to add a fourth. American Century has gone the other way. ACEM is actively managed, must keep at least 80% in emerging markets, looks across 24 countries and may wander into frontier markets as well.
The prospectus describes “a bottom-up approach to stock selection”, favouring companies whose earnings and fundamentals are accelerating, supplemented by “systematic risk controls and portfolio construction techniques”. It charges 0.59%, joins two small-cap Insights siblings, and nowhere explains what the insight is. On the evidence of the document, it is fundamental research with risk controls, which is also a fair description of most good fund managers.
UBS MSCI USA pair (USNSL and USSEL, SIX Swiss Exchange)
The most reassuring three letters in this batch belong to UBS. The supplement for the MSCI USA NSL fund says, in full: “The Fund shall not engage in securities lending arrangements, as indicated by the term ‘NSL’ in the name of the Fund.” It rules out repo and reverse repo as well, for good measure.
Otherwise it does what an index fund is supposed to do. It fully replicates the MSCI USA, screens out controversial weapons, and charges 0.09% on the US dollar classes and up to 0.12% on the hedged ones. Its sibling, the MSCI USA SEL, arrived alongside it, and UBS has not yet said what those letters stand for. I will leave the obvious guess to the prospectus.
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