The Tema American Reshoring ETF RSHO, the first U.S.-listed fund dedicated to reshoring investing, outperformed the S&P 500 Index over the last year, remarkably achieving this without holding any of the high-flying Magnificent Seven stocks.

As of June 3, 2024, the RSHO ETF recorded a 32% annual gain, outperforming the SPDR S&P 500 ETF Trust SPY by about 7 percentage points.

“The industrial world needs to be rewired to support local manufacturing,” Maurits Pot, founder and CEO at Tema ETF Management, told Benzinga in an exclusive interview.

Pot noted supply chain insecurity, trade wars, geopolitical tensions and deglobalization are pushing companies such as Micron Technology Inc. MU, Apple Inc. AAPL, General Motors Co. GM, and Boeing Co. BA to bring their manufacturing activities back to America for the first time.

“I think what we’re starting to see is a massive reinvestment and reactivation of the U.S. industrial heartland,” Pot said, highlighting that parts of Indiana, Kansas and Michigan, once left behind during the globalization era, are now thriving.

“We’re seeing big investments from U.S. and foreign companies wanting to supply the U.S., realizing they can no longer manufacture in China, Korea or Vietnam,” he added.

Chart: Reshoring-Related Stocks Have Outperformed The S&P 500 Index Over The Last Year

Still At Early Stages Of The Megatrend, With A Bipartisan Support

This process of deglobalization and reshoring is going to happen over many years, and we’re still in the early stages, according to the expert.

Government policy is driving this reshoring trend, with $1.85 trillion of bipartisan support across three major bills aimed at bridging the U.S. infrastructure investment gap with the rest of the world.

Pot asserts that both political parties agree on bringing jobs, manufacturing, and intellectual property back to America.

How Does the RSHO ETF Invest?

The Tema American Reshoring ETF holds 31 companies, including large firms like Eaton Corp plc ETN — the fund’s largest holding — and under-the-radar reshoring winners in the U.S. midcap space.

“The playing field in reshoring is actually relatively flat. And what I mean is there’s a lot of pockets of opportunity for different players,” Pot told Benzinga.

The fund targets reshoring firms in three categories:

1. Reshoring Firms: Companies like Parker-Hannifin Corp. PH are building new, automated factories in the U.S., bringing manufacturing closer to customers and reducing supply chain risks.
2. Reshoring Facilitators: Companies like Summit Materials Inc. SUM, which provide construction materials, are upgrading U.S. infrastructure, from roads to factories.
3. Reshoring Beneficiaries: Firms like Clean Harbors Inc. CLH, a leader in hazardous waste disposal, are seeing growth and valuation increases due to more reshoring activity.

The fund is managed by Chris Semenuk, an expert in the industrials sector with 30 years of experience navigating market cycles, known for identifying undervalued stocks with strong long-term fundamentals.

Last week, the RSHO ETF witnessed $15 million of inflows, pushing its asset under management to $35 million.

Proudly highlighting the strong performance of the fund, Pot commented: “There are not many funds that don’t own the Magnificent 7 but have beaten the S&P in the last year.”

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