A comprehensive review by Investment Officer, based on Morningstar data, revealed that the Amundi MSCI Semiconductors ESG Screened Ucits ETF has the largest exposure to Nvidia worldwide, with an allocation of 34.49 percent as of June 17.
In response to a press question about the high concentration of Nvidia in the Amundi fund, Luxembourg financial regulator CSSF has confirmed that this holding does not constitute a breach of the 2010 law on undertakings for collective investment.
This fund, domiciled in Luxembourg and managing approximately 430 million dollars in assets, is designed to replicate the performance of the MSCI ACWI Semiconductors & Semiconductor Equipment ESG Filtered Net Total Return Index. This index includes other major players such as TSMC, Broadcom, and ASML.
Amundi has clarified that the fund’s objective is to mirror the index’s performance, both upwards and downwards. “The methodology of the index provider details that the Index constrains the weight of the largest group entity at 35 percent, and all other group entities at 20 percent,” Amundi said earlier.
CSSF confirms compliance
A standard Ucits investment is not allowed to allocate more than 10 percent to a single stock. Article 44 of the Ucits fund law stipulates in paragraph one that limits for investments in shares or debt securities issued by a single entity can be raised to 20 percent if the Ucits fund aims to replicate a recognised index.
Paragraph two of the same article further allows this limit to be increased to 35 percent “under exceptional market conditions, specifically in regulated markets where certain securities or money market instruments are highly dominant,” CSSF explained.
“Given Nvidia’s significant weighting, it is therefore possible for this stock to represent up to 35 percent of an index without being considered as a breach,” CSSF told Investment Officer.
CSSF said the exception requires a confirmation letter verifying the eligibility of the financial index used by the funds. This letter must be submitted during the fund’s setup.