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Should You Invest in the Invesco Dynamic Semiconductors ETF (PSI)?

Zacks Equity Research
·3 min read

If you're interested in broad exposure to the Technology - Semiconductors segment of the equity market, look no further than the Invesco Dynamic Semiconductors ETF (PSI), a passively managed exchange traded fund launched on 06/23/2005.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $317.64 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Semiconductors segment of the equity market. PSI seeks to match the performance of the Dynamic Semiconductor Intellidex Index before fees and expenses.

The index is comprised of stocks of semiconductor companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.31%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector--about 100% of the portfolio.

Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 5.21% of total assets, followed by Skyworks Solutions Inc (SWKS) and Texas Instruments Inc (TXN).

The top 10 holdings account for about 46.28% of total assets under management.

Performance and Risk

So far this year, PSI has added about 37.38%, and is up about 46.95% in the last one year (as of 11/08/2020). During this past 52-week period, the fund has traded between $46.49 and $92.07.

The ETF has a beta of 1.31 and standard deviation of 35.31% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Semiconductors ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PSI is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

VanEck Vectors Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index and the iShares PHLX Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index. VanEck Vectors Semiconductor ETF has $3.21 billion in assets, iShares PHLX Semiconductor ETF has $4.05 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.46%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Skyworks Solutions, Inc. (SWKS) : Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
 
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
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Zacks Investment Research