Defiance launches XIGV ETF targeting Nasdaq-100 ex-software firms
Defiance ETFs launched the Defiance US 100 Tech Ex Software ETF (XIGV), targeting the Nasdaq-100 while excluding software companies to focus on AI infrastructure like semiconductors. The fund tracks the Indxx US 100 Tech Focused Ex Software Technology Index and uses a passive strategy to screen out firms with significant software revenue. The launch reflects a thesis that AI disruption will shift value from software to hardware and connectivity layers.
*this image is generated using AI for illustrative purposes only.
Defiance ETFs announced the launch of the Defiance US 100 Tech Ex Software ETF (Cboe: XIGV), the first U.S. ETF designed to target the Nasdaq-100 while systematically screening out the software industry. The fund seeks to track the total return performance, before fees and expenses, of the Indxx US 100 Tech Focused Ex Software Technology Index. This index provides exposure to many of the largest U.S.-listed, technology-oriented companies while screening out companies whose core business is software.
Investment Thesis
Defiance built XIGV around the thesis that artificial intelligence is disrupting traditional software-as-a-service (SaaS) business models. The firm posits that large language models and AI agents can increasingly generate code, automate workflows, and reproduce features that software companies have historically sold by subscription. Consequently, Defiance believes the value lies in the semiconductors, hardware, and connectivity layers that underpin AI systems, rather than in the software layer itself.
Index Methodology
XIGV employs a passive, index-based approach. The underlying index starts with the 100 largest Nasdaq-listed non-financial companies. It then removes any company that derives 50% or more of its revenue from software-focused activities. These activities include application software, system software and cloud infrastructure, cybersecurity, engineering and data platforms, and IT services. The resulting portfolio is oriented toward the hardware, semiconductor, and infrastructure sectors.
| Criteria | Details |
|---|---|
| Starting Universe | 100 largest Nasdaq-listed non-financial companies |
| Screening Threshold | Companies deriving 50% or more revenue from software are excluded |
| Excluded Sectors | Application software, system software, cloud infrastructure, cybersecurity, engineering/data platforms, IT services |
| Target Sectors | Hardware, semiconductors, infrastructure |
| Primary Concentration | Semiconductors industry (as of launch) |
Executive Commentary
"The creator economy didn’t just compete with traditional television, it changed who captured the value, and we believe AI is doing the same thing to software," said Sylvia Jablonski, Chief Investment Officer of Defiance ETFs. She added that when models can write code and automate workflows, the software layer becomes exposed, while the underlying semiconductors, hardware, and connectivity become more essential. XIGV is designed for investors seeking exposure to this foundational layer without holding software names.
Fund Details
Defiance ETFs, LLC serves as the investment adviser, while Tidal Investments LLC acts as the sub-adviser. The fund is non-diversified and carries specific risks, including concentration risk in the semiconductors industry and equity market risk. As a new fund with no operating history, prospective investors do not have a track record on which to base their investment decisions.
How will the fund's performance correlate with traditional Nasdaq-100 ETFs during periods of software sector volatility?
What specific valuation metrics or market conditions would signal that the market has fully priced in the shift from software to hardware value?
How might the index methodology evolve if major semiconductor companies increasingly integrate software services into their revenue streams?
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