Key Highlights

● ASMH rose 0.90% to $11.72 in Friday's October 16 intraday session.

● The fund holds at least 95% of net assets in ASML American Depositary Receipts.

● Currency forwards and swaps hedge the Euro against the US Dollar.

● ASMH carries a 0.19% net expense ratio and is classified as non-diversified.

The ASML Holding NV ADRhedged ETF (NYSE American:ASMH) combines a core position in American Depositary Receipts of ASML Holding N.V. (NASDAQ:ASML) with over-the-counter currency forwards and foreign exchange swaps. ASMH rose 0.90% to $11.72 in intraday trading on Friday, October 16.

For North American investors seeking equity exposure to ASML Holding N.V., the Dutch semiconductor equipment titan that holds an absolute global monopoly over Extreme Ultraviolet (EUV) lithography systems, purchasing US-listed American Depositary Receipts has long been the standard approach. However, conventional ADR investing introduces an unhedged foreign exchange variable: when the Euro depreciates against the US Dollar, the dollar-denominated ADR suffers a currency haircut, eroding equity gains earned on Euronext Amsterdam.

ASMH directly solves this transatlantic structural friction. By neutralizing Euro-Dollar currency volatility, it allows dollar-based investors to capture the pure local currency equity performance of ASML’s ordinary shares in Amsterdam.

Legal Architecture & Single-Stock Trust Structure

ASMH is registered under the Investment Company Act of 1940 as an open-end management investment company, operating as an actively managed series of Tidal Trust II. The fund is advised by Tidal Investments LLC in collaboration with ADRhedged, a specialized financial sponsor focused on currency-immunized cross-border investing. The fund launched in March 2025.

Unlike broad-market index funds, ASMH is classified as 'non-diversified' under federal securities laws because its portfolio is concentrated in the securities of a single corporate issuer and its related derivative contracts. The 1940 Act structure provides traditional mutual fund safeguards, including daily portfolio transparency, third-party custody of underlying ADRs, and standardized Form 1099 tax reporting for shareholders.

Portfolio Composition: Physical ADRs vs. Over-The-Counter Swaps

ASMH’s portfolio construction is straightforward yet technically sophisticated. Under normal market conditions, the fund invests at least 95% of its net assets in American Depositary Receipts of ASML Holding N.V., which trade on Nasdaq under the ticker ASML. Each ordinary ADR represents an ownership interest in one ordinary share of ASML deposited with an international custodian bank.

To strip away currency risk, the fund deploys the remaining portion of its assets into currency forward contracts and foreign exchange swap agreements with major institutional broker-dealers. These OTC contracts are structured to hedge against fluctuations in the exchange rate between the US Dollar and the Euro. If the Euro weakens against the Dollar, gains from the currency hedge offset the downward currency pressure on the ADR; conversely, if the Euro strengthens, hedge losses reduce the ADR's currency tailwind.

Cost Structure, Expense Caps & Financing Drag

ASMH carries a highly competitive contractual expense profile. The fund charges a net annual expense ratio of 0.19%, facilitated by an expense limitation agreement wherein the advisor absorbs operational costs exceeding this threshold.

However, the stated expense ratio does not capture implicit derivative financing costs. Forward currency contracts reflect the interest rate differential between the Federal Reserve's policy rate and the European Central Bank's deposit rate (covered interest parity). When US interest rates exceed European rates, holding a long-dollar, short-euro currency hedge typically earns a slight interest rate premium, reducing structural hedging drag and benefiting fund performance.

Performance Dissection: Hedged vs. Unhedged Returns

In intraday trading on Friday, October 16, ASMH opened at $11.64 and traded between $11.64 and $11.77, compared with a previous close of $11.61. Its 52-week range of $6.69 to $13.62 reflects surging global demand for ASML’s next-generation High-NA (0.55 NA) EUV lithography systems, which are indispensable for manufacturing sub-2-nanometer artificial intelligence microchips.

Crucially, comparing ASMH’s returns against unhedged ASML ADRs highlights the impact of currency hedging. During periods when the US dollar rallied against the European single currency, ASMH outperformed unhedged ADRs by the exact margin of the Euro's decline, demonstrating the precision of the fund's currency immunization strategy.

Distribution Profile, Pass-Through Income & Taxation

ASMH distributes periodic dividend income, passing through the ordinary cash dividends declared by ASML Holding N.V. on its common stock, net of foreign dividend withholding taxes and any net derivative settlement expenses. The fund's trailing distribution yield stands at approximately 0.65%.

From a tax perspective, ASMH issues a standard Form 1099-DIV to shareholders. Dividends paid by ASML generally qualify for favorable qualified dividend income (QDI) tax rates for US taxpayers who satisfy standard holding period rules. Furthermore, because the fund manages currency derivatives within a regulated investment company (RIC), shareholders avoid complex Schedule K-1 partnership tax forms.

Liquidity, Market Making & Single-Stock Arbitrage

ASMH is supported by registered market makers, including Virtu Americas LLC. Secondary market liquidity is directly anchored to the immense liquidity of the underlying ASML ADRs on Nasdaq and the deep, multi-trillion-dollar liquidity of the spot EUR/USD foreign exchange market.

Authorized participants can seamlessly arbitrate any pricing discrepancies between ASMH’s secondary market price and its real-time indicative net asset value (ASMH.NV) by simultaneously buying or selling the underlying ADRs and offsetting currency contracts, ensuring the fund trades near fair value throughout the trading day.

Primary Investment Risks: Concentration & Counterparty Exposure

While ASMH eliminates currency risk, it magnifies other fundamental risks. Most notably, the fund carries 100% single-stock concentration risk. Shareholders are completely exposed to corporate operational setbacks at ASML, including customer capex delays from major chip foundries, technical execution hurdles in High-NA tool deployment, and tightening geopolitical export restrictions barring equipment shipments to China.

Additionally, the fund is exposed to derivative counterparty risk. Because currency swaps trade over-the-counter rather than on centralized clearing exchanges, a default by a derivative counterparty during extreme market stress could disrupt the currency hedge and create unexpected tracking friction.

One Issuer, One Currency Hedge

The fund offers currency-neutral exposure to ASML, the Dutch semiconductor equipment maker with a dominant position in EUV lithography, and holds at least 95% of net assets in its ADRs.

If the Euro weakens against the Dollar, gains from the currency hedge offset the downward currency pressure on the ADR; if the Euro strengthens, hedge losses reduce the ADR's currency tailwind.