4 ETFs To Invest In Soaring Semiconductor Stocks

Video length 00:11:31

Semiconductor stocks have surged this year after suffering a steep decline in December. The PHLX semiconductor index is up about 17% in 2019. Progress in US-China trade talks has helped these stocks as they have a lot of exposure to China.

Further, there were a lot of concerns about slowdown in semiconductor demand late last year but Q4 results were not as bad as feared. Nvidia (NVDA - Free Report) had warned about results but results and guidance were better than expected. Many other chip companies including-- Lam Research (LRCX - Free Report), AMD (AMD - Free Report) and Xilinx (XLNX - Free Report) --also reported better than expected results.

While some of the traditional business areas face challenges, many newer growth areas have emerged for chipmakers, including Autonomous Cars, Cloud Computing, virtual reality, Gaming, Wearables and Internet of Things (IoT).

There is a lot of innovation going on in the industry; chipmakers are adopting new materials and technologies to manufacture smaller and more efficient chips.

The iShares PHLX Semiconductor ETF (SOXX - Free Report) is a modified market cap weighted ETF. It has 30 holdings with a cap of 8% on individual securities and holds not more than five securities at that cap. Broadcom (AVGO), Intel (INTC - Free Report), Texas Instruments (TXN) and Nvidia are its top holdings.

The VanEck Vectors Semiconductor ETF (SMH - Free Report) also follows a market cap weighted index. However, it has a more concentrated portfolio compared with SOXX. Taiwan Semi (TSM  - Free Report), Intel and Nvidia are its top holdings.

The SPDR S&P Semiconductor ETF (XSD - Free Report) is an equal-weighted ETF. With an expense ratio of 0.35%, it is one of the cheapest ETFs in the space.  

The Invesco Dynamic Semiconductors Portfolio (PSI - Free Report) is a smart Beta ETF. It evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value. With an expense ratio of 0.63%, it is the most expensive ETF in the space.

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