VanEck Vectors Semiconductor (SMH) has $1 billion in assets, but trades 3.3 million shares daily. While sub-industry exposure is similar to the SOXX index, exposure to Taiwan is much greater, with CFRA buy-recommended Taiwan Semiconductor Manufacturing as the largest holding. SMH has a 0.35% net expense ratio. Both SOXX and SMH have hefty weightings in large-cap stocks.
SPDR S&P Semiconductor (XSD) has $330 million in assets and trades 50,000 shares daily. Unlike SOXX and SMH, XSD only holds semiconductor stocks and is equally weighted. As such, mid-caps, such as CFRA buy-recommended Marvell Technology, is of similar size in the portfolio as AVGO. The ETF has a 0.35% net expense ratio.
PowerShares Dynamic Semiconductors (PSI) has $315 million in assets and trades 70,000 shares daily. Unlike the three of other ETFs, whose holdings are relatively static, PSI tracks an index based on value, quality, and momentum characteristics – the index of 30 stocks is rebalanced and reconstituted quarterly. ADI and AVGO are two of the ETF’s semiconductor holdings, but the PSI recently had more exposure to semiconductor equipment stocks (35% of assets), including Applied Materials (AMAT) than its peers. PSI has a 0.63% expense ratio.
Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.