A spate of new gadget introductions, including the new iPhone and the Apple Watch unveiled Tuesday by Apple (NasdaqGS: AAPL), is lifting demand for semiconductors and that is materializing into increased demand for semiconductor exchange traded funds.
Chip ETFs have been surging this year, hauling in cash along the way after investors pulled $407 from the funds in the four years leading up to 2014, reports Eric Lam for Bloomberg.
With a 23% year-to-date advance heading into Wednesday, the iShares PHLX Semiconductor ETF (NasdaqGM: SOXX) has added nearly $205 million in assets this year. SOXX, which turned 13 in July, had less than $366 million in assets under management as of April 7, but that number has since swelled to $537.7 million. [Chip ETFs Prove Durable]
SOXX is home to just 31 stocks and represents a play on the largest semiconductor names with Intel (NasdaqGS: INTC), Texas Instruments (NasdaqGS: TXN) and Qualcomm (NasdaqGS: QCOM) combining for about 24% of the ETF’s weight.
The $394.9 million Market Vectors Semiconductor ETF (NYSEArca: SMH) has added $19.3 million in new assets this year. Like SOXX, SMH is heavily allocated to the largest chip names with Intel accounting for nearly 21.8% of the ETF’s weight.
By way of an almost 15.3% weight to Taiwan Semiconductor (NYSE: TSM), SMH is heavily exposed to demand for Apple products, such as the iPhone and iPad, because Taiwan Semiconductor is a major component supplier to Apple. Apple and SMH have traded in near lockstep this year with the stock gaining 24% while the ETF is up 23.4%. [Tech Ties Lift Taiwan ETF]
The leader among chip ETFs this year has been the SPDR S&P Semiconductor ETF (NYSEArca: XSD). With a gain of 27%, XSD is not just the best-performing non-leveraged chip ETF, it is also one of the top non-leveraged tech ETFs of any type.
Investors have poured $70.4 million into XSD this year, or 35% of the ETF’s $199.4 million assets under management. That is not surprising as all five of XSD’s top-five holdings are up more than 50% this year with three having more than doubled. Further highlighting XSD’s 2014 strength is this anecdote: First Solar (NasdaqGS: FSLR) is the worst performer among the ETF’s top-10 holdings and that stock is up more than 23% this year. [This Tech ETF is Tops]
SPDR S&P Semiconductor ETF
