Launched on 06/23/2005, the Invesco Dynamic Semiconductors ETF (
PSI Quick Quote PSI - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Semiconductors segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways 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 9, placing it in bottom 44%.
The fund is sponsored by Invesco. It has amassed assets over $877.06 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 0.56%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.13%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 97.50% of the portfolio.
Looking at individual holdings, Nvidia Corp (
NVDA Quick Quote NVDA - Free Report) accounts for about 5.44% of total assets, followed by Kla Corp ( KLAC Quick Quote KLAC - Free Report) and Broadcom Inc ( AVGO Quick Quote AVGO - Free Report) .
The top 10 holdings account for about 45.69% of total assets under management.
Performance and Risk
Year-to-date, the Invesco Dynamic Semiconductors ETF has added about 39.69% so far, and it's up approximately 41.48% over the last 12 months (as of 12/07/2021). PSI has traded between $100.49 and $153.53 in this past 52-week period.
The ETF has a beta of 1.22 and standard deviation of 36.71% 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 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.
VanEck Semiconductor ETF (
SMH Quick Quote SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF ( SOXX Quick Quote SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Semiconductor ETF has $7.28 billion in assets, iShares Semiconductor ETF has $9.35 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%. Bottom Line
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