ETF Edge: Fed decision, tokenization and fabless semi funds

ETF Market Trends - Investors are focusing on excess yield as the Fed potentially cuts rates and absolute yields decrease [3][4] - Securitized products, especially AAA CLOs, are attracting significant investor interest due to their higher yields compared to potentially lower interest rates [4][5] - The top 10 largest ETFs constitute approximately 30% of assets under management, indicating a top-heavy market [6][7] - The top 3 ETFs, all S&P 500 products, account for $2 trillion out of the total $12 trillion in the market [7] - Recent ETF product launches that have gained traction are primarily in fixed income, Bitcoin, and tech-related areas [8] Technological Innovation in Finance - Tokenization is viewed as a potentially transformative technology for financial services, possibly more impactful than AI in this specific sector [10] - Blockchain technology has the potential to reduce costs and improve efficiency in delivering financial services [12] - Option-based strategies are expected to drive new product development in the ETF industry [30][31] - Regulatory clarity around tokenization is anticipated to be a driver of ETF innovation [32] Semiconductor Industry and AI - A new semiconductor ETF (SMHX) focuses on fabless companies, which design chips but outsource manufacturing, as key drivers of AI advancement [14][15] - Interconnectivity and power efficiency are identified as subcategories with significant growth potential within the semiconductor space [18][19] - AI is considered to be in the early stages of a super cycle, with continued development in foundational models and application layers [22][23][24] - Fabless designers are crucial for enabling AI to move closer to the end user, making it more accessible and widespread [25] - The ability of companies like Nvidia to pivot and innovate in chip design, without the burden of infrastructure buildouts, is seen as a key advantage [28]