The semiconductor industry is showing a lot of positive growth signs lately despite broader market headwinds. Recently, Semiconductor Industry Association reported that global semiconductor sales totaled $36.2 billion for the month of August, driven higher by a 23.6% increase in sales in the Americas. Separately, Taiwan Semiconductor Manufacturing
The sector as a whole has remained largely unscathed from the pandemic-driven global financial crisis, with many chipmakers benefiting from the remote learning and business driving the need for personal computers. Semiconductors are also the driving forces behind the outperforming tech industry, with chipmakers powering popular market trends like 5G innovation, mobile technology, and electric vehicles.
The industry has also kept busy with large completed and rumored acquisitions like NVIDIA's
Like all types of investing, exchange-traded funds are always a less-risky bet by providing exposure to a board swath of an industry or trend rather than picking and choosing single companies that may underperform.
Popular chipmaker ETFs like VanEcks Semiconductor ETF
Here's a look inside the ETFs:
VanEcks Semiconductor ETF (SMH): SMH follows the MVIS U.S. Listed Semiconductor 25 Index, which focuses on many of the largest chipmakers in developed markets listed on U.S stock exchanges. Its largest holdings include Taiwan Semiconductor Manufacturing, NVIDIA, and Intel
iShares PHLX Semiconductor ETF (SOXX): SOXX is the largest chipmaker ETF, holding $3.65 billion in assets. This fund holds both foreign and domestic firms, ensuring even weighting among the roughly 125 stocks in its portfolio by capping its top holdings at about 8%. SOXX's top holdings currently are Qualcomm
Technology Select Sector SPDR Fund (XLK): XLK follows an index of technology stocks within the S&P 500. While XLK is not a strict semiconductor ETF, chipmakers are about 17% of its holdings, with other top holdings including semiconductor-enabled technologies like electronic devices and software development enterprises. The fund's top holdings include Apple