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 Quick Quote PSI - Free Report) , a passively managed exchange traded fund launched on 06/23/2005.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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%.
The fund is sponsored by Invesco. It has amassed assets over $258.51 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.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 0.39%.
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 100% of the portfolio.
Looking at individual holdings, Advanced Micro Devices Inc (
AMD Quick Quote AMD - Free Report) accounts for about 6.84% of total assets, followed by Nvidia Corp ( NVDA Quick Quote NVDA - Free Report) and Qualcomm Inc ( QCOM Quick Quote QCOM - Free Report) .
The top 10 holdings account for about 48.02% of total assets under management.
Performance and Risk
The ETF return is roughly 10.27% and was up about 27.77% so far this year and in the past one year (as of 09/25/2020), respectively. PSI has traded between $46.49 and $84.31 during this last 52-week period.
The ETF has a beta of 1.30 and standard deviation of 34.80% 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.
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 an outstanding 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 Quick Quote SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares PHLX Semiconductor ETF ( SOXX Quick Quote SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Vectors Semiconductor ETF has $2.49 billion in assets, iShares PHLX Semiconductor ETF has $3.47 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.46%. Bottom Line
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Zacks ETF Center.