The technology sector has been the best-performing sector of 2019 and is heading toward having its best year in a decade driven by chipmakers, most of which saw triple-digit rally. Trade optimism has been the biggest catalyst as chip stocks have a lot of exposure to China. They derive a large portion of their revenues from China since it is the world’s biggest chip market and also have supply chains in the country.
As semiconductors have been the most important driver of the overall technology growth, it is now used in day-to-day life from cars, electronic gadgets to planes and weapons. Chipmakers power much of the world’s technology with their new innovation and set the stage for digitalization in various corners like healthcare, transport, financial systems, defense, agriculture, retail and many others (read: 4 ETFs to Invest in Soaring Semiconductor Stocks). Robust demand for memory chips and other semiconductor products owing to the rapid adoption of cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, artificial intelligence, cryptocurrencies, and other advanced information technologies are fueling huge growth in the space. Additionally, the deployment of 5G (fifth-generation) technology — the next wireless revolution — is creating further opportunities. The wave of mergers and acquisitions provides further impetus to the space. Given the bullish fundamentals, investors might want to tap the space with the top-performing semiconductor ETFs and stocks of this year. We have highlighted five of them. Best ETFs VanEck Vectors Semiconductor ETF SMH This fund provides exposure to 25 semiconductor companies by tracking the MVIS US Listed Semiconductor 25 Index (read: 9 ETFs at the Forefront of 2019 Market Rally). Zacks ETF Rank: #2 (Buy) AUM: $1.5 billion Expense Ratio: 0.35% YTD Return: 68% SPDR S&P Semiconductor ETF XSD This fund provides equal-weight exposure to 36 chipmakers by tracking the S&P Semiconductor Select Industry Index. Zacks ETF Rank: #2 AUM: $514.3 million Expense Ratio: 0.35% YTD Return: 65.6% iShares PHLX Semiconductor ETF SOXX This ETF offers exposure to 30 U.S. companies that design, manufacture, and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. Zacks ETF Rank: #2 AUM: $2.4 billion Expense Ratio: 0.46% YTD Return: 63.2% First Trust Nasdaq Semiconductor ETF FTXL This fund offers exposure to the 30 most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index (read: 5 ETF Areas Up At Least 45% in 2019). Zacks ETF Rank: #3 (Hold) AUM: $43.6 million Expense Ratio: 0.60% YTD Return: 63% Invesco Dynamic Semiconductors ETF PSI) This fund follows the Dynamic Semiconductor Intellidex Index, holding 58 securities in its basket. Zacks ETF Rank: #1 (Strong Buy) AUM: $219.3 million Expense Ratio: 0.58% YTD Return: 53.3% Best Stocks Lattice Semiconductor Corporation LSCC This company designs, develops and markets high performance programmable logic devices and related development system software. Zacks Rank: #3 VGM Score: B Market Cap: $2.57 billion YTD Return: 177.9% Cirrus Logic Inc. CRUS This fabless semiconductor supplier develops, manufactures and markets analog, mixed-signal, and audio DSP integrated circuits (ICs). Zacks Rank: #1 VGM Score: D Market Cap: $4.82 billion YTD Return: 151.2% You can see . the complete list of today’s Zacks #1 Rank stocks here Advanced Micro Devices Inc. ( AMD Quick Quote AMD - Free Report) It provides microprocessors (x86-based), chipsets, discrete graphics processing units (GPUs) and professional graphics (read: A Bunch of Top-Ranked ETFs That Crushed the Market in 2019). Zacks Rank: #3 VGM Score: C Market Cap: $51.4 billion YTD Return: 150.2% Inphi Corporation IPHI This company is a provider of fabless high-speed analog semiconductor solutions for the communications and computing markets. Zacks Rank: #3 VGM Score: B Market Cap: $3.44 billion YTD Return: 134.3% Lam Research Corporation LRCX This company supplies wafer fabrication equipment and services to the semiconductor industry. Zacks Rank: #3 VGM Score: D Market Cap: $42.6 billion YTD Return: 115.7% Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>