Back to top

Image: Shutterstock

Semiconductor ETFs to Buy Now

Read MoreHide Full Article

The semiconductor space has gained momentum lately following a move to boost semiconductor manufacturing. This is especially true as President Joe Biden is set to sign into law a bipartisan bill to invest billions of dollars in domestic semiconductor manufacturing and science research, with the aim of boosting U.S. competitiveness with China and other foreign rivals.

As such, ETFs targeting the semiconductor space like iShares Semiconductor ETF (SOXX - Free Report) , VanEck Vectors Semiconductor ETF (SMH - Free Report) , Invesco PHLX Semiconductor ETF (SOXQ - Free Report) , SPDR S&P Semiconductor ETF (XSD - Free Report) and Invesco Dynamic Semiconductors ETF (PSI - Free Report) have been rising.

The bill, dubbed the Chips and Science Act, would provide $54 billion in grants for semiconductor manufacturing and research, tens of billions to support regional technology hubs and a tax credit covering 25% of investments in semiconductor manufacturing through 2026. As such, it will encourage investment in chip manufacturing and spur the innovation and development of other U.S. technologies. Last week, the bill was already passed by the House and Senate (read: Time for Semiconductor ETFs on Senate's CHIPS-Plus Bill Passage?).

The move will boost the domestic chip industry as the bill will ease supply-chain disruptions and lower the cost for the semiconductor industry. This has created a bullish sentiment in the space.

Semiconductors have been the most important drivers of the overall growth in technology, given the use of chips in day-to-day life from cars, electronic gadgets to planes and weapons. The demand will continue to trend higher given the increased digitization in various corners like healthcare, transport, financial systems, defense, agriculture and retail, among others.

The rapid adoption of cutting-edge technology like cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, artificial intelligence, cryptocurrencies, 5G and other advanced information technologies should continue to fuel growth. Further, the introduction of expensive and new generation chips has been leading to an enhancement in the product mix for semiconductors.

iShares Semiconductor ETF (SOXX - Free Report)

iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket and charges a fee of 40 bps a year from investors.

iShares Semiconductor ETF has amassed $7.1 billion in its asset base and trades in a volume of about 1 million shares a day. The product soared 21% over the past month and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Intel Misses Q2 Earnings Estimate, Cuts View: ETFs in Focus).

VanEck Vectors Semiconductor ETF (SMH - Free Report)

VanEck Vectors Semiconductor ETF provides exposure to 25 companies involved in semiconductor production and equipment by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $7.1 billion and charges 35 bps in annual fees and expenses.

VanEck Vectors Semiconductor ETF is heavily traded with a volume of around 4.3 million shares per day and has gained 21% in a month. It has a Zacks ETF Rank #1 with a High risk outlook.

Invesco PHLX Semiconductor ETF (SOXQ - Free Report)

Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket.

Invesco PHLX Semiconductor ETF has accumulated $61.4 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 42,000 shares. Invesco PHLX Semiconductor ETF has added 21.3% over the past month.

SPDR S&P Semiconductor ETF (XSD - Free Report)

SPDR S&P Semiconductor ETF offers exposure to the semiconductor segment of the broad technology sector and tracks the S&P Semiconductor Select Industry Index. It holds 40 stocks in its portfolio, with each making up for not more than a 4% share. SPDR S&P Semiconductor ETF has AUM of $1.1 billion and an average daily volume of about 74,000 shares (read: 5 Top-Ranked ETFs That Outperformed in July).

SPDR S&P Semiconductor ETF charges 35 bps in fees per year and has a Zacks ETF Rank #1 with a High risk outlook. It surged 25.7% in a month.

Invesco Dynamic Semiconductors ETF (PSI - Free Report)

Invesco Dynamic Semiconductors ETF tracks the Dynamic Semiconductor Intellidex Index, holding 32 securities in its basket, with each making up less than 5.4% share.

Invesco Dynamic Semiconductors ETF has AUM of $595.7 million and sees a moderate average daily volume of 27,000 shares. Expense ratio is 0.56%. PSI has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

Published in