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Is Invesco Dynamic Semiconductors ETF (PSI) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco Dynamic Semiconductors ETF (PSI - Free Report) debuted on 06/23/2005, and offers broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $798.09 million, making it one of the average sized ETFs in the Technology ETFs. Before fees and expenses, PSI seeks to match the performance of the Dynamic Semiconductor Intellidex Index.
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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.56% for PSI, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.16%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For PSI, it has heaviest allocation in the Information Technology sector --about 97.50% of the portfolio.
Looking at individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 5.44% of total assets, followed by Kla Corp (KLAC - Free Report) and Broadcom Inc (AVGO - Free Report) .
The top 10 holdings account for about 45.69% of total assets under management.
Performance and Risk
The ETF has lost about -16.79% and is up about 7.88% so far this year and in the past one year (as of 01/25/2022), respectively. PSI has traded between $106.78 and $155.95 during this last 52-week period.
The fund has a beta of 1.21 and standard deviation of 36.79% for the trailing three-year period, which makes PSI a high risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Semiconductors ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Semiconductor ETF has $7.64 billion in assets, iShares Semiconductor ETF has $8.87 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
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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Is Invesco Dynamic Semiconductors ETF (PSI) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco Dynamic Semiconductors ETF (PSI - Free Report) debuted on 06/23/2005, and offers broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $798.09 million, making it one of the average sized ETFs in the Technology ETFs. Before fees and expenses, PSI seeks to match the performance of the Dynamic Semiconductor Intellidex Index.
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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.56% for PSI, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.16%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For PSI, it has heaviest allocation in the Information Technology sector --about 97.50% of the portfolio.
Looking at individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 5.44% of total assets, followed by Kla Corp (KLAC - Free Report) and Broadcom Inc (AVGO - Free Report) .
The top 10 holdings account for about 45.69% of total assets under management.
Performance and Risk
The ETF has lost about -16.79% and is up about 7.88% so far this year and in the past one year (as of 01/25/2022), respectively. PSI has traded between $106.78 and $155.95 during this last 52-week period.
The fund has a beta of 1.21 and standard deviation of 36.79% for the trailing three-year period, which makes PSI a high risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Semiconductors ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Semiconductor ETF has $7.64 billion in assets, iShares Semiconductor ETF has $8.87 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
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.