RSHO ETF Tops S&P 500 Without the "Magnificent 7"
Over the past year, ending June 3, 2024, $TEMA AMERICAN RESHORING ETF(RSHO)$ , the first US-listed fund focused on the theme of American manufacturing reshoring, has surged 32%. Meanwhile, $SPDR S&P 500 ETF Trust(SPY)$ only recorded a modest gain of about 7%, clearly lagging behind $S&P 500(.SPX)$ .
It's worth noting that this ETF doesn't hold a single share of the market-leading "Magnificent Seven".
Maurits Pot, the founder and CEO of Tema ETF Management, believed:
The industrial sector needs a new layout to support domestic manufacturing. And the supply chain insecurities, trade wars, geopolitical tensions, and deglobalization are forcing companies like Micron Technology (NASDAQ: MU), Apple (NASDAQ: AAPL), General Motors (NYSE: GM), and Boeing (NYSE: BA) to relocate their manufacturing back to the US for the first time.
There's a massive reinvestment and reactivation in the heart of American industry. Both American and foreign companies that want to supply the US are realizing they can't manufacture in China, South Korea, and Vietnam anymore, so they're pouring money into the US. Government policies are driving this trend of manufacturing reshoring, and three major bipartisan bills have been passed, providing up to $1.85 trillion in funding.
What companies does the RSHO ETF invest in?
RSHO holds stocks in 31 companies, including big names like its top holding, $Eaton Corp PLC(ETN)$ , as well as lesser-known but promising mid-cap US companies that stand to benefit from manufacturing reshoring. The fund mainly focuses on three categories of reshoring companies:
Manufacturing reshoring companies: Such as $Parker Hannifin(PH)$ that are building new, automated factories in the US, thereby shortening the distance between manufacturing and customers and reducing supply chain risks.
Manufacturing reshoring service companies: Companies like $Summit Materials(SUM)$ that provide building materials for US infrastructure upgrades, such as roads and factories.
Companies benefiting from manufacturing reshoring: Companies like $Clean Harbors(CLH)$ , a leader in hazardous waste disposal, that are seeing growth and valuation increases due to the growth of manufacturing reshoring companies.
Chris Semenuk, the manager of RSHO, is an industrial expert with 30 years of experience in the field and has weathered various market cycles. He excels at identifying undervalued stocks with solid long-term fundamentals. Last week, the fund saw a net inflow of $15 million, bringing its managed asset size to $35 million.
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