Best Semiconductor ETFs for Q1 2020

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Semiconductors power more devices and technology processes every day, finding uses in mobile phones, cars, military weapons, smart technology, and much more. Exchange-traded funds can provide investors with broad exposure to the semiconductor industry. About 6 ETFs currently track semiconductor stocks, excluding leveraged and inverse funds. Although this industry is growing rapidly, there are still risks involved in investing directly in untested, relatively new companies. Some of the best known companies in semiconductor ETFs include Micron Technology, Inc. (MU) and Advanced Micro Devices, Inc. (AMD). ETFs help to reduce risk associated with individual stocks by providing access to a larger basket of companies. The best semiconductor ETF, based on performance in the past year, is the VanEck Vectors Semiconductor ETF (SMH). Below, we’ll examine the top 3 best semiconductor ETFs.

VanEck Vectors Semiconductor ETF (SMH)

  • Performance over 1 year: 47.0%
  • Expense Ratio: 0.35%
  • Annual Dividend Yield: 1.44%
  • 3-Month Average Daily Volume: 3,502,633
  • Assets Under Management: $1.9 billion
  • Inception Date: December 20, 2011
  • Issuing Company: VanEck

SMH uses the MVIS US Listed Semiconductor 25 Index as a benchmark. This index focuses on many of the largest semiconductor companies based in the U.S. As of February 9, 2020, the top holdings for SMH include Taiwan Semiconductor Manufacturing Co., Ltd. (TSM), the world’s largest semiconductor foundry, Intel Corp. (INTC), a semiconductor, cloud computing and PC company, and NVIDIA Corp. (NVDA), a graphics processing unit and chip maker.

  • Performance over 1 year: 45.1%
  • Expense Ratio: 0.46%
  • Annual Dividend Yield: 1.20%
  • 3-Month Average Daily Volume: 445,446
  • Assets Under Management: $2.5 billion
  • Inception Date: July 10, 2001
  • Issuing Company: iShares

This ETF ensures relatively even weighting in its portfolio by capping its top holdings at around 8% of the total portfolio. This means that SOXX tends to look for foreign as well as U.S. firms, and that it balances both larger and smaller companies as well. Currently, the top holding for SOXX are Nvidia Corp., Intel Corp., and Texas Instruments, Inc. (TXN), a semiconductor and integrated circuit manufacturer.

  • Performance over 1 year: 44.5%
  • Expense Ratio: 0.35%
  • Annual Dividend Yield: 0.50%
  • 3-Month Average Daily Volume: 128,205
  • Assets Under Management: $502.2 million
  • Inception Date: February 6, 2006
  • Issuing Company: State Street SPDR

XSD follows an equal-weighted index of mostly pure play semiconductor stocks. The weighting methodology of this portfolio means that XSD does not favor massive companies like many other semiconductor ETFs do. As such, its top holdings are currently Synaptics, Inc. (SYNA), a human interface hardware and software company, SunPower Corp. (SPWR), a solar panel and related products manufacturer, and Advanced Micro Devices, Inc., the maker of computer processors and semiconductors.

Source: Investopedia

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