As global economic conditions shift, U.S. manufacturing and healthcare are becoming key areas of focus for long-term investors. With the 2024 U.S. election cycle and both major parties supporting domestic production, reshoring has emerged as a strategic opportunity. Tema American Reshoring ETF (ticker: RSHO), for instance, aims to capture this reshoring trend, seeking companies at the forefront of bringing production back to the U.S.
Yuri Khodjamirian, CIO of Tema Global, spoke with The Wealth Advisor’s Scott Martin to discuss key themes shaping today’s investment landscape—reshoring, the U.S. election, and the healthcare sector. Khodjamirian’s insights highlight how bipartisan support for reshoring, potential shifts from the election, and evolving healthcare policies can all impact portfolio strategies for advisors and their clients.
U.S. Elections: A High-Stakes Event with Long-Term Perspective
Khodjamirian emphasizes the uncertainty that accompanies any major election, explaining, “Elections are always uncertain, right? And markets aren’t always friendly to uncertainty. There’s probably going to be a little bit of volatility around this.” While these events can certainly stir markets in the short term, Khodjamirian points out that, historically, election outcomes do not fundamentally alter long-term market performance. “If you look three months after an election, typically who wins is not statistically significant for performance of markets,” he says, adding that the prevailing wisdom is to “stay invested and be focused.”
Beyond short-term market fluctuations, certain sectors experience shifts in focus based on government priorities and bipartisan support. Manufacturing and reshoring initiatives, for example, remain supported by both major political parties, with past policies from both parties indicating a continued commitment to domestic industry growth. “Both parties support that by bringing manufacturing back to the United States,” Khodjamirian notes. “The Biden-Harris administration has been very vocal about building out U.S. manufacturing across semiconductors and other areas as well, and Trump, of course, using tariffs and tax incentives.”
The consistent backing for reshoring from both sides signals that this theme is poised to persist, making it a compelling focus for long-term investors. “RSHO is going to continue regardless of who ends up in office,” he adds.
Reshoring: A Continued Priority with Economic Potential
In response to global supply chain challenges, reshoring has evolved into a critical theme. RSHO targets companies benefiting from the reshoring trend, with an actively managed approach designed to capture under-the-radar opportunities. “What we’re trying to do is find the companies that are under the radar, exposed to the megatrend that’s reshoring,” Khodjamirian explains, stressing that these are often mid-cap firms pivotal in facilitating the shift toward domestic production.
Khodjamirian emphasizes that RSHO is not an indexed fund; instead, it selectively curates a portfolio of companies with strong balance sheets and competitive valuations. Led by a fund manager with 30 years of market experience, the approach is centered on identifying businesses with the financial resilience and operational expertise to navigate the complexities of reshoring.
The process is “really focused on companies with good operating bases, great balance sheets and cashflow, and that have a valuation case where we can have an edge. That’s how the fund is constructed,” Khodjamirian says.
The approach seeks to optimize returns by focusing on companies with sound fundamentals, positioning investors to benefit from reshoring’s long-term trajectory.
Healthcare and the Election: Policy, Pricing, and Opportunity
As an issue heavily influenced by political developments, healthcare is expected to undergo shifts based on the election outcome. Representing approximately 17% of the U.S. GDP, according to the Centers for Medicare & Medicaid Services, healthcare policies around drug pricing, access to care, and regulation hold significant economic weight. Khodjamirian points out, “Both parties support a focus on getting drug prices down and getting more access to healthcare.” He references the Inflation Reduction Act, which introduces Medicare drug price negotiations—a factor that initially rattled healthcare markets but may, in time, foster greater sector stability.
An anticipated post-election shift in regulatory leadership, such as a potential change at the Federal Trade Commission, could also pave the way for increased mergers and acquisitions activity in healthcare.
“One thing that’s been missing a little bit this year is M&A,” Khodjamirian says. “We think maybe if there’s a change there, there’s going to be a pickup in M&A after the election,” Such a change could encourage growth by removing some of the barriers that have hindered consolidation within the sector.
Strategic Allocation: Integrating Reshoring and Healthcare into Portfolios
Khodjamirian asserts that funds such as RSHO are not simply “novelty” or “satellite” investments. Instead, they offer substantial growth potential and diversification benefits for core allocations. For advisors aiming to diversify growth-oriented portfolios beyond technology-heavy benchmarks such as the S&P 500, Khodjamirian’s advice is clear: consider the secular trends driving reshoring and healthcare. “What they want to do is, let me diversify that, but I don’t want to sacrifice the growth that I’ve seen from these companies,” he says.
Investors who recognize these structural trends—reshoring as a response to shifting global supply chains and healthcare’s growing focus on cost-effective, outcome-based treatments—stand to gain by positioning these themes as core, growth-oriented allocations. “Places like the obesity space with weight loss drugs, but also American reshoring, these are mega trends where the growth rates are quite high and rivaling those growth rates that you see in tech,” Khodjamirian notes, further underscoring the viability of these investments in diversifying portfolios without sacrificing growth potential.
Adapting to a Changing Investment Landscape: Long-Term Relevance and Stability
Tema’s RSHO ETF is positioned not just as a short-term response to recent economic challenges but as a long-term strategy that taps into deep-rooted changes in the U.S. economy. Given evolving global supply chain structures, the reshoring trend reflects a growing commitment to reduce dependence on international manufacturing—a priority reinforced by the COVID-19 pandemic’s impacts on global logistics.
By investing in RSHO, advisors and their clients have the opportunity to gain access to a diversified portfolio of companies that are fundamentally positioned to benefit from the return of production to U.S. soil. As Khodjamirian says, “We build what we call a proprietary universe of reshoring companies.”
Tema’s approach underscores the importance of diversification across robust and emerging sectors including reshoring and healthcare, especially considering the 2024 election cycle. By focusing on industries aligned with bipartisan support and economic resilience, RSHO provides a thoughtful balance between growth and stability, making it an appealing option for advisors who aim to future-proof portfolios in a changing market environment.
An Informed Approach for Financial Advisors
For financial advisors, Tema Global’s methodology offers unique strategies to enhance growth while addressing shifts in policy, demand, and market focus. Khodjamirian’s insights highlight the value of understanding and capitalizing on these opportunities. With reshoring poised to drive manufacturing investments across a bipartisan agenda and the healthcare sector on the brink of breakthrough opportunities in obesity and cardiometabolic treatments, Tema ETFs positions itself at the forefront of innovative investment strategies that align with current economic and political realities.
In the context of the U.S. election and anticipated market shifts, advisors looking for growth should keep an eye on these themes. ETFs such as RSHO can offer a pragmatic and proactive approach for advisors aiming to balance growth, diversification, and sector-specific opportunities in their clients’ portfolios.
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Disclosure
Before investing carefully consider the Fund’s investment objective, risks, charges, and expenses contained in the prospectus available at www.temaetfs.com. Read carefully before investing.
Risk Information
Investing involves risk including possible loss of principal. There is no guarantee the adviser’s investment strategy will be successful.
Sector Focus Risk: The Fund may invest a significant portion of its assets in one or more sectors, including Industrials, Materials and Utilities, and thus will be more susceptible to the risks affecting those sectors than funds that have more diversified holdings across several sectors. The success of the Fund’s investment strategy depends in part on the ability of the companies in which it invests to reshore or onshore services to the United States.
Companies may face significant legal, financial and political headwinds in the reshoring or onshoring of jobs into the United States, and these factors may be detrimental to performance. Industrial and Utilities sector companies will likewise be subject to the risks of Government regulation, world events, exchange rates and economic conditions, technological developments and liabilities for environmental damage and general civil liabilities. In addition, many materials companies are significantly affected by the level and volatility of commodity prices, exchange rates, import controls, worldwide competition, environmental policies and consumer demand. Investing in foreign and emerging markets involves risks relating to political, economic, or regulatory conditions not associated with investments in U.S. securities and instruments in addition the fund Is exposed to currency risk.
Tema Global Limited serves as the investment adviser to Tema American Reshoring ETF (the “Fund”), and NEOS Investments, LLC serves as a sub adviser to the Fund. The Fund is distributed by Foreside Services LLC, which is not affiliated with Tema Global Limited nor NEOS Investments, LLC. Check the background of Foreside on FINRA’s BrokerCheck.
Distributor: Foreside Fund Service LLC
For inquiries: info@temaetfs.com
