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Semiconductor ETFs Enjoying Huge Investors Love

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The semiconductor space is seeing huge investor interest this year amid the weakness in stock prices. This is especially true as the ETFs targeting this sector have pulled in a record of about $6.8 billion in capital so far this year, exceeding $5.2 billion in 2021 and $2.1 billion in the year-ago quarter, according to data compiled by Bloomberg.

As a result, Direxion Daily Semiconductor Bull 3x Shares SOXL led the inflows this year, gathering $4.3 billion in asset base. VanEck Semiconductor ETF SMH, iShares Semiconductor ETF SOXX, Invesco PHLX Semiconductor ETF SOXQ and First Trust Nasdaq Semiconductor ETF FTXL have seen inflows of $2.7 billion, $233.4 million, $21.1 million and $7.5 million, respectively.

Investors are betting that the industry will rebound from the supply-chain hitches and chip shortages that have dragged the stocks lower.

Though semiconductor stocks have been beaten down this year, the industry fundamentals have remained strong as supply chains are being reorganize and demand for chips remains solid. Global chip sales hit a record of $555.9 billion, up 26.2% year over year, in 2021 and are expected to grow 8.8% in 2022, per the Semiconductor Industry Association (see: all the Technology ETFs here).

Semiconductors have been the most important drivers of the overall growth in technology, given the use of chips in day-to-day life from cars, electronic gadgets to planes and weapons. The demand will continue to trend higher given the increased digitization in various corners like healthcare, transport, financial systems, defense, agriculture and retail among others. The rapid adoption of cutting-edge technology like cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, artificial intelligence, cryptocurrencies, 5G and other advanced information technologies should continue to fuel growth.

Further, the introduction of expensive and new generation chips has been leading to an enhancement in the product mix for semiconductors. Moreover, the stock market’s slide has also made valuations of chip stocks more attractive.

Direxion Daily Semiconductor Bull 3x Shares (SOXL)

Direxion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the ICE Semiconductor Index.

Direxion Daily Semiconductor Bull 3x Shares has amassed about $5.3 billion in its asset base while charging 89 bps in fees per year. Volume is good as it exchanges 42.1 million shares per day on average. SOXL has plunged 61.4% so far this year (read: 5 ETFs That Gained Investors Love Last Week).

VanEck Vectors Semiconductor ETF (SMH)

VanEck Vectors Semiconductor ETF provides exposure to 25 companies involved in semiconductor production and equipment by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $7.7 billion and charges 35 bps in annual fees and expenses.

VanEck Vectors Semiconductor ETF is heavily traded with a volume of around 8 million shares per day and has lost 22.3% in the same time frame. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

iShares Semiconductor ETF (SOXX)

iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 43 securities in its basket and charges a fee of 43 bps a year from investors.

iShares Semiconductor ETF has amassed $8 billion in its asset base and trades in volume of about 1.5 million shares a day. The product has dropped 22.6% so far this year. It has a Zacks ETF Rank #1 with a High risk outlook.

Invesco PHLX Semiconductor ETF (SOXQ)

Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket.

Invesco PHLX Semiconductor ETF debuted in the space last year in June and has accumulated $56.3 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 42,000 shares. Invesco PHLX Semiconductor ETF is down 23% this year.

First Trust Nasdaq Semiconductor ETF (FTXL)

First Trust Nasdaq Semiconductor ETF offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. FTXL holds 30 stocks in its basket (read: Time to Tap Semiconductor ETFs on Beaten-Down Valuation?).

First Trust Nasdaq Semiconductor ETF has accumulated $96.4 million in AUM. The average trading volume is light at around 14,000 shares and the expense ratio is 0.60%. FTXL has shed 23% so far this year. It has a Zacks ETF Rank #2 (Buy).


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VanEck Semiconductor ETF (SMH): ETF Research Reports
 
iShares Semiconductor ETF (SOXX): ETF Research Reports
 
Direxion Daily Semiconductor Bull 3X Shares (SOXL): ETF Research Reports
 
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
 
Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports
 
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