We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Semiconductor ETFs Are Seeing Solid Inflows in 2022
Read MoreHide Full Article
The semiconductor space is attracting huge inflows in 2022 despite weakness in chipmaker stocks. A Bloomberg report highlights that around $6.8 billion of inflows have already been witnessed by chip ETFs so far in the year. The figure shows a staggering jump in inflows in comparison to investments of $5.2 billion and $2.1 billion in 2021 and 2020, respectively (per a Bloomberg report). The report also points out that the two largest funds by AUM, iShares Semiconductor ETF (SOXX - Free Report) and VanEck Semiconductor ETF (SMH - Free Report) , have already witnessed inflows of $137 million and $2.5 billion, respectively, in 2022.
The inflows are pouring in as semiconductor makers are grappling with supply-chain disturbances leading to chip shortages amid high demand. The microchip supply crunch was previously impacting only the automobile industry but now smartphone and other electronic goods manufacturers are also bearing its brunt. In fact, the advisory firm Forrester projects the chip shortage to last through 2022 and into 2023, which is a concern. Going on, the introduction of expensive and new generation chips has also been leading to an enhancement in the product mix for semiconductors (per a CNBC article).
The growing adoption of cloud computing and the ongoing infusion of artificial intelligence and machine learning are brightening up the prospects for the semiconductor space in 2022. Moreover, the revolutionary 5G platform is expected to act as a major catalyst for semiconductor revenues in the mobile phone market.
Kevin Kelly, the chief executive officer of Kelly ETFs, has commented on the space and said that “It’s investors positioning for the long term as semiconductors are at the convergence of multiple thematic demand drivers. If there is a cyclical industry to put new capital to work, semis appear to be an interesting sector to allocate in today’s market,” according to the same Bloomberg article.
Notably, the chip market has witnessed strength in the end markets like mobile phones, notebooks, servers, automotive, smart home, gaming, wearables and Wi-Fi access points, per an International Data Corporation (IDC) report.
The space has also seen accelerating demand with the growing usage of electronic vehicles along with the automobile sector becoming specifically advanced to include more electronic components in vehicles that rely on chips. The coronavirus-induced work-from-home and web-based learning trends spurred demand for chips from PC manufacturers and data-center operators.
A report by trade credit insurer Euler Hermes projects the semiconductor space, which saw sales rising 26% to $553 billion in 2021, to witness another 9% rise in sales and surpassing the $600-billion mark for the first time in 2022. In this regard, analysts at Euler Hermes commented that “The current semiconductor cycle has been firing on all cylinders since the industry emerged from its worst recession in 2019,” per a CNBC article.
Semiconductor ETFs in Focus
Investors aiming to make the most of this uptrend in a diversified way could consider the following ETFs:
iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to 30 firms. The fund has amassed $7.99 billion in its asset base. It charges 43 basis points (bps) in fees a year from investors. It sports a Zacks ETF Rank #1 (Strong Buy), with a High-risk outlook (read: 5 ETF Areas Shining Bright as US Economy Looks Strong).
This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. The product managed assets worth $7.76 billion and charges 35 bps in annual fees and expenses. The fund currently carries a Zacks ETF Rank #1, with a High-risk outlook (read: 4 Sector ETFs to Bet Big On Despite Subdued Manufacturing Data).
This fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the Nasdaq US Smart Semiconductor Index. FTXL has accumulated $96.4 million of AUM. The expense ratio is 0.60%. FTXL presently has a Zacks ETF Rank of 2 (Buy).
This fund tracks the Dynamic Semiconductor Intellidex Index, holding 31 securities in its basket. The product has AUM of $676.6 million. The expense ratio is 0.56%. PSI sports a Zacks ETF Rank #1 at present, with a High-risk outlook.
This fund tracks the S&P Semiconductor Select Industry Index. The fund has AUM of $1.18 billion. It charges 35 bps in fees per year. The product has a Zacks ETF Rank #1 presently, with a High-risk outlook (read: 5 Top-Ranked ETFs That Can Shine Bright in April).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why Semiconductor ETFs Are Seeing Solid Inflows in 2022
The semiconductor space is attracting huge inflows in 2022 despite weakness in chipmaker stocks. A Bloomberg report highlights that around $6.8 billion of inflows have already been witnessed by chip ETFs so far in the year. The figure shows a staggering jump in inflows in comparison to investments of $5.2 billion and $2.1 billion in 2021 and 2020, respectively (per a Bloomberg report). The report also points out that the two largest funds by AUM, iShares Semiconductor ETF (SOXX - Free Report) and VanEck Semiconductor ETF (SMH - Free Report) , have already witnessed inflows of $137 million and $2.5 billion, respectively, in 2022.
The inflows are pouring in as semiconductor makers are grappling with supply-chain disturbances leading to chip shortages amid high demand. The microchip supply crunch was previously impacting only the automobile industry but now smartphone and other electronic goods manufacturers are also bearing its brunt. In fact, the advisory firm Forrester projects the chip shortage to last through 2022 and into 2023, which is a concern. Going on, the introduction of expensive and new generation chips has also been leading to an enhancement in the product mix for semiconductors (per a CNBC article).
The growing adoption of cloud computing and the ongoing infusion of artificial intelligence and machine learning are brightening up the prospects for the semiconductor space in 2022. Moreover, the revolutionary 5G platform is expected to act as a major catalyst for semiconductor revenues in the mobile phone market.
Kevin Kelly, the chief executive officer of Kelly ETFs, has commented on the space and said that “It’s investors positioning for the long term as semiconductors are at the convergence of multiple thematic demand drivers. If there is a cyclical industry to put new capital to work, semis appear to be an interesting sector to allocate in today’s market,” according to the same Bloomberg article.
Notably, the chip market has witnessed strength in the end markets like mobile phones, notebooks, servers, automotive, smart home, gaming, wearables and Wi-Fi access points, per an International Data Corporation (IDC) report.
The space has also seen accelerating demand with the growing usage of electronic vehicles along with the automobile sector becoming specifically advanced to include more electronic components in vehicles that rely on chips. The coronavirus-induced work-from-home and web-based learning trends spurred demand for chips from PC manufacturers and data-center operators.
A report by trade credit insurer Euler Hermes projects the semiconductor space, which saw sales rising 26% to $553 billion in 2021, to witness another 9% rise in sales and surpassing the $600-billion mark for the first time in 2022. In this regard, analysts at Euler Hermes commented that “The current semiconductor cycle has been firing on all cylinders since the industry emerged from its worst recession in 2019,” per a CNBC article.
Semiconductor ETFs in Focus
Investors aiming to make the most of this uptrend in a diversified way could consider the following ETFs:
iShares Semiconductor ETF (SOXX - Free Report)
iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to 30 firms. The fund has amassed $7.99 billion in its asset base. It charges 43 basis points (bps) in fees a year from investors. It sports a Zacks ETF Rank #1 (Strong Buy), with a High-risk outlook (read: 5 ETF Areas Shining Bright as US Economy Looks Strong).
VanEck Semiconductor ETF (SMH - Free Report)
This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. The product managed assets worth $7.76 billion and charges 35 bps in annual fees and expenses. The fund currently carries a Zacks ETF Rank #1, with a High-risk outlook (read: 4 Sector ETFs to Bet Big On Despite Subdued Manufacturing Data).
First Trust Nasdaq Semiconductor ETF (FTXL - Free Report)
This fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the Nasdaq US Smart Semiconductor Index. FTXL has accumulated $96.4 million of AUM. The expense ratio is 0.60%. FTXL presently has a Zacks ETF Rank of 2 (Buy).
Invesco Dynamic Semiconductors ETF (PSI - Free Report)
This fund tracks the Dynamic Semiconductor Intellidex Index, holding 31 securities in its basket. The product has AUM of $676.6 million. The expense ratio is 0.56%. PSI sports a Zacks ETF Rank #1 at present, with a High-risk outlook.
SPDR S&P Semiconductor ETF (XSD - Free Report)
This fund tracks the S&P Semiconductor Select Industry Index. The fund has AUM of $1.18 billion. It charges 35 bps in fees per year. The product has a Zacks ETF Rank #1 presently, with a High-risk outlook (read: 5 Top-Ranked ETFs That Can Shine Bright in April).