An equal-weight semiconductor sector exchange traded fund has been outperforming its market-capitalization-weighted counterparts as smaller companies sprint ahead of bulkier, established firms in the recent rally.
SPDR S&P Semiconductor ETF (NYSEArca: XSD) is up 26.3% over the past three months.
In comparison, the market capitalization weighted ETFs iShares PHLX SOX Semiconductor Sector (NYSEArca: SOXX) is up 20.7% over the last three months, PowerShares Dynamic Semiconductors (NYSEArca: PSI) is 18.7% higher and Market Vectors Semiconductor ETF (NYSEArca: SMH) added 18.9%.
XSD’s market capitalization breakdown includes giants 2.4%, large 10.2%, medium 37.2%, small 39.7% and micro 10.5%.
Smaller companies tend to outperform during the initial stages of a bull market run after taking the brunt of the beating during market turns.
According to the nonprofit organization World Semiconductor Trade Statistics, the semiconductor sector will rebound this year after a slowdown in 2012 on higher sales and new computing devices, reports Agam Shah for PCWorld. The Semiconductor Industry Association, though, expects the sector to recover by next year.
Semiconductor revenue is projected to expand 4.5% for 2013 year-over-year.