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Is PowerShares Dynamic Semiconductors Portfolio (PSI) a Hot ETF Right Now?
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The PowerShares Dynamic Semiconductors Portfolio (PSI - Free Report) made its debut on 06/23/2005, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $332.22 M, this makes it one of the average sized ETFs in the Technology ETFs. PSI is managed by Invesco Powershares. Before fees and expenses, PSI seeks to match the performance of the Dynamic Semiconductor Intellidex Index.
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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for PSI are 0.63%, which makes it on par with most peer products in the space.
PSI's 12-month trailing dividend yield is 0.21%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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.
Taking into account individual holdings, Micron Technology Inc (MU - Free Report) accounts for about 6.33% of the fund's total assets, followed by Intel Corp (INTC - Free Report) and Applied Materials Inc (AMAT - Free Report) .
The top 10 holdings account for about 45.21% of total assets under management.
Performance and Risk
The fund's year-to-date return has added roughly 0.50%, and it's up approximately 23.06% in the last one year (as of 04/10/2018). PSI has traded between $39.72 and $57.37 in the past 52-week period.
The ETF has a beta of 1.24 and standard deviation of 22.60% for the trailing three-year period, making it a high choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
PowerShares Dynamic Semiconductors Portfolio 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 Vectors Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares PHLX Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Vectors Semiconductor ETF has $1.32 B in assets, iShares PHLX Semiconductor ETF has $1.57 B. SMH has an expense ratio of 0.35% and SOXX charges 0.48%.
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 PowerShares Dynamic Semiconductors Portfolio (PSI) a Hot ETF Right Now?
The PowerShares Dynamic Semiconductors Portfolio (PSI - Free Report) made its debut on 06/23/2005, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $332.22 M, this makes it one of the average sized ETFs in the Technology ETFs. PSI is managed by Invesco Powershares. Before fees and expenses, PSI seeks to match the performance of the Dynamic Semiconductor Intellidex Index.
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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for PSI are 0.63%, which makes it on par with most peer products in the space.
PSI's 12-month trailing dividend yield is 0.21%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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.
Taking into account individual holdings, Micron Technology Inc (MU - Free Report) accounts for about 6.33% of the fund's total assets, followed by Intel Corp (INTC - Free Report) and Applied Materials Inc (AMAT - Free Report) .
The top 10 holdings account for about 45.21% of total assets under management.
Performance and Risk
The fund's year-to-date return has added roughly 0.50%, and it's up approximately 23.06% in the last one year (as of 04/10/2018). PSI has traded between $39.72 and $57.37 in the past 52-week period.
The ETF has a beta of 1.24 and standard deviation of 22.60% for the trailing three-year period, making it a high choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
PowerShares Dynamic Semiconductors Portfolio 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 Vectors Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares PHLX Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Vectors Semiconductor ETF has $1.32 B in assets, iShares PHLX Semiconductor ETF has $1.57 B. SMH has an expense ratio of 0.35% and SOXX charges 0.48%.
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.