U.S. Markets closed

Semiconductor ETFs: What Investors Need to Know

Neena Mishra

Semiconductor stocks surged after the G20 meeting as the United States and China agreed to resume their trade talks and not impose any new tariffs. President Trump also agreed to allow the Chinese telecom giant Huawei to resume buying US equipment.

Chip stocks have a lot of exposure to China. They derive a large portion of their revenues from sales in China since it is the world’s biggest chip market and also have supply chains in the country.

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, 5G and Internet of Things (IoT).

At the same time, chip stocks may remain volatile till the US and China finalize a comprehensive trade deal. Also, the Chinese government has been trying to promote the domestic chip industry and reduce reliance on foreign firms.

The iShares PHLX Semiconductor ETF (SOXX) 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. Nvidia (NVDA), Qualcomm (QCOM) and Intel (INTC) are its top holdings.

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

The SPDR S&P Semiconductor ETF (XSD) is an equal weighted ETF. It is the top performer among chip ETFs this year.

The Invesco Dynamic Semiconductors Portfolio (PSI) 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.

To learn more about these ETFs, please watch the short video above.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


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
 
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
 
Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
 
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Intel Corporation (INTC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
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