Thematic ETFs targeting the AI buildout have become increasingly concentrated, with optics and photonics exposure being the latest hot trend. One of the more successful launches from Corgi Funds so far has been the Corgi Lithography and Semiconductor Photonics ETF (EUV), writes Tony Dong, lead ETF analyst at ETF Central.
I miss the days when ETF investors gravitated toward low-cost, broadly diversified products. These days, it often feels like investors are doing the exact opposite, willingly paying more for increasingly concentrated exposure.
Corgi Lithography and Semiconductor Photonics ETF (EUV)
ETF providers are focused on the next AI infrastructure bottleneck: optics and photonics. Broadly speaking, optics refers to the manipulation and transmission of light, while photonics focuses on generating, controlling, and detecting photons.
As of the start of June, there are really only two notable pure-play optics and photonics ETFs available to investors – one of which is EUV. Corgi is a bit of an unusual firm by ETF industry standards. While its parent company is better known for its online insurance business and ties to the Y Combinator startup ecosystem, it has expanded aggressively into ETFs, launching roughly three dozen products in a very short period of time.
EUV has already grown to just under $200 million in assets under management. More impressively, it charges just a 0.35% expense ratio, which is surprisingly affordable for a niche thematic ETF.
The portfolio itself is fairly concentrated and targets what Corgi describes as the optics and photonics value chain. That includes EUV lithography systems used in semiconductor manufacturing, laser and optical components for fiber networks and LiDAR systems, silicon photonics technologies used inside AI data centers, and precision measurement and inspection equipment.
The holdings reflect that approach. The portfolio is essentially a who's who of semiconductor and advanced manufacturing companies. Taiwan Semiconductor Manufacturing Co. (TSM) is currently the largest holding at just over 10%, followed by ASML Holding NV (ASML) and Lam Research Corp. (LRCX).
