Will Semiconductor ETFs Continue Their Rally?
The semiconductor industry was one of the best performing industries in 2014, fueled by increased mobile phone and PC demands. It will be hard to match that performance in 2015, however the outlook for the sector remains strong and industry consolidation may be a theme going forward.
After hitting all-time highs in December, the semiconductor industry has started to pull back to a point of support. Selecting individual semiconductor companies can be difficult for the average investor; one way to minimize risk is through the use of a semiconductor ETF.
Highlighted below are three semiconductor ETFs that have hit highs in the last month and pulled back to a point of support.
Market Vectors Semiconductor
The Market Vectors Semiconductor ETF (NYSE: SMH) tracks 26 of the largest U.S-listed semiconductor companies across four countries, with the U.S. at 71 percent and Taiwan at 16 percent being the highest weighted countries.
The top individual holdings include:
- Intel Corporation (NASDAQ: INTC) with a 19.8 percent holding
- Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE: TSM) making up 14.7 percent
- ASML Holding NV (ADR) (NASDAQ: ASML) coming in at 5.3 percent
The ETF has gained 30 percent over the last 12 months and 7 percent over the last six months. The ETF has an expense ratio of 0.35 percent.
SPDR S&P Semiconductor
The SPDR S&P Semiconductor (ETF) (NYSE: XSD) is made up of 48 companies in the semiconductor industry. The top individual holdings include:
- Cirrus Logic, Inc. (NASDAQ: CRUS) with a 2.9 percent holding
- Intersil Corp (NASDAQ: ISIL) making up 2.6 percent of the ETF
- SunPower Corporation (NASDAQ: SPWR) coming in at 2.6 percent
XSD is up 29 percent over the last 12 months and 2 percent over the last six months. The ETF has an expense ratio of 0.35 percent.
PowerShares Dynamic Semiconductors
The PowerShares Dynamic Semiconductors (ETF) (NYSE: PSI) consists of 29 semiconductor companies. The top holdings are:
- Skyworks Solutions Inc (NASDAQ: SWKS) with a 5.3 percent holding
- Applied Materials, Inc. (NASDAQ: AMAT) making up 5.1 percent of the ETF
- KLA-Tencor Corporation (NASDAQ: KLAC) at 5 percent
The semiconductor ETF is up 34 percent over the last 12 months, and 8 percent over the last six months. PSI has an expense ratio of 0.63 percent.
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