That means smaller stocks are more prominent in XSD as highlighted by its average market value of $34.7 billion. The fund has 36 holdings, the largest of which is Nvidia at just 3.97%. Unlike rival chip ETFs, XSD isn’t as reliant on a small number of stocks because it’s an equal-weight fund. Although, XSD violated its 200-day line only to reclaim it during last Friday’s above-average volume rally that saw the fund gain 2.24%. On a technical basis, the SPDR S&P Semiconductor ETF (NYSEARCA: XSD) looks somewhat like SMH. But the potential for lost Huawei revenue would be a problem because that’s one of TSM’s largest customers. Risks for TSM are currently twofold: the coronavirus, and its relationship with Huawei - the controversial Chinese mobile phone company that was ensnared it the U.S.- China trade flap.Īs will other SMH holdings, TSM will get past the coronavirus issue. Moreover, an integral part of that rebound effort will be Taiwan Semiconductor (NYSE: TSM), which commands 13.28% of SMH’s weight. That could prove to be the start of a near-term recovery for SMH. Perhaps more importantly, the fund found support at its 200-day moving average, a level it had not closed below since last June. One of the largest chip ETFs, the VanEck Vectors Semiconductor ETF (NASDAQ: SMH) is an interesting case right now and not just because the fund allocates 23.4% of its combined weight to the aforementioned Intel, Nvidia and AMD (in that order).Īfter getting drubbed in the first four days of last week, SMH was able to piece together a gain of almost 2% last Friday on more than double the average daily. So, let’s dive in and take a look at three names.Įxpense Ratio: 0.35% per year, or $35 on a $10,000 investment But perhaps it’s time to revisit some of the best chip ETFs available. Time will tell what last Friday’s price action means. Additionally, Advanced Micro Devices (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA) posted notable gains on the day, while Intel (NASDAQ: INTC) was one of the less bad names among big-name tech stocks. Last Friday was another weak day for stocks, but thanks to a late-day rally, the Nasdaq Composite –home to a slew of marquee semiconductor stocks - eked out a small gain. That said, an interesting situation could be brewing for chip ETFs. Overall, the bottom line is that investors cannot be blamed if they are considering avoiding chip ETFs right now. Those are the breaks when an industry isn’t just dependent on China and other big Asian markets for production, but as primary end markets as well. And with the semiconductor industry being one of the primary industries adversely affected by the coronavirus from China, it’s not easy to construct a piece endorsing the related chip ETFs right now.Įven high-quality semiconductor names are being impacted by the coronavirus. Last week, the widely followed PHXL Semiconductor Index slipped nearly 10%.
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