Should You Invest in the Invesco Semiconductors ETF (PSI)?
If you're interested in broad exposure to the Technology - Semiconductors segment of the equity market, look no further than the Invesco Semiconductors ETF (PSI), a passively managed exchange traded fund launched on 06/23/2005.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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 8, placing it in top 50%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $672.01 million, making it one of the larger 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 Dynamic Semiconductor Intellidex 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.55%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.52%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 98% of the portfolio.
Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 6.74% of total assets, followed by Broadcom Inc (AVGO) and Applied Materials Inc (AMAT).
The top 10 holdings account for about 47.77% of total assets under management.
Performance and Risk
Year-to-date, the Invesco Semiconductors ETF has gained about 39% so far, and it's up approximately 35.03% over the last 12 months (as of 08/31/2023). PSI has traded between $28.55 and $48.19 in this past 52-week period.
The ETF has a beta of 1.37 and standard deviation of 36.55% 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 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 an excellent 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.
IShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index. IShares Semiconductor ETF has $9.08 billion in assets, VanEck Semiconductor ETF has $9.79 billion. SOXX has an expense ratio of 0.35% and SMH charges 0.35%.
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.
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Invesco Semiconductors ETF (PSI): ETF Research Reports
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
iShares Semiconductor ETF (SOXX): ETF Research Reports
