Stocks set to benefit from U.S. reshoring trend, says fund manager
As the United States presidential election nears, there’s one key theme that’s expected to continue regardless of who wins: the reshoring of American manufacturing . Both the Republicans and Democrats have proposed policies that favor bolstering manufacturing in the country – through subsidies or tariffs. And investors are paying attention. Tema ETFs runs the actively managed American Reshoring ETF (ticker RSHO), designed to take advantage of this trend. “The American reshoring fund is built on the foundation that the world’s not getting any safer. Geopolitics are a problem. Trade wars, actual wars. Supply chains are stretched, and companies are making decisions that incremental capacity is going to go into the United States closer to the customer,” Yuri Khodjamirian, Tema ETF’s chief investment officer, told CNBC’s Pro Talks. One company at the forefront of this trend is Clean Harbors , a waste management firm specializing in hazardous waste disposal, according to the Khodjamirian. The stock is up 30% this year. As industrial production in the United States increases, the demand for Clean Harbors’ services is expected to grow. Earlier this year, it launched a new “one-stop-shop” service to tackle PFAS — perfluoroalkyl and polyfluoroalkyl substances, commonly referred to as forever chemicals — across North America. “They are one of the few companies that has a solution in that area,” said Khodjamirian, referring to the stock as an “under the radar” play owing to its mid-cap size. CLH 5Y line Another key player in the reshoring narrative is the chip maker Taiwan Semiconductor , according to the CIO. TSMC, which is also benefitting from the rise in AI demand, is up nearly 60% this year. The company has increased its investments in the United States to $65 billion, with plans to set up three semiconductor fabrication plants in Arizona, thanks to the United States CHIPS Act. It is expected to create 6,000 “direct high-tech, high-wage jobs,” 20,000 construction jobs, and tens of thousands of indirect supplier and consumer jobs, according to the company. The first of those plants is expected to begin manufacturing next year, and all three are expected to be up and running by the end of the decade. “We think that is going to be a big advantage for them,” said Khodjamirian, who is also the portfolio manager of Tema’s Monopolies and Oligopolies ETF . However, the fund manager cautioned that there could be challenges in hiring skilled labor due to the decline in the United States semiconductor manufacturing industry over the years. While TSMC’s stock may have more room to run, Khodjamirian advised investors to be mindful of the cyclical nature of the semiconductor industry. He suggested investors consider their position size and timing carefully. “It’s a very cyclical stock, as I say, on a six-to-12-month view. I think these stocks [chip stocks] all have legs, but at some point, they’ll start to price in a down cycle, much earlier than it’ll materialize in the fundamentals,” he added. TSM 5Y line While TSMC is less than 1% of the American Reshoring ETF, Clean Harbors is a top 10 holding with 4.71% allocated.
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