Invest in Large-Cap Semiconductors with This Fund

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

The VanEck Vectors Semiconductor ETF (NASDAQ:SMH) is an open-ended fund that tracks a market-cap-weighted index of 25 of the largest U.S.-listed semiconductor companies.

This exchange-traded fund (ETF) is highly concentrated in common stocks and depositary receipts of U.S.-listed semiconductor companies. Mid-cap companies and foreign companies listed in the United States can also be included.

To be initially eligible, 50% of company revenues must be primarily in the production of semiconductors and semiconductor equipment. The top 50 eligible companies by market cap are then given two separate ranks based on free-float market capitalization in descending order and three-month average daily trading volume in descending order.

Then, those two ranks are summed, and the top 25 companies are selected. A capping scheme is applied to ensure diversification and more weight is given to the larger companies.

The Index seeks to track the most liquid companies in the industry based on market capitalization and trading volume. Index methodology favors the largest companies in the industry, leaving SMH with over 98% of its holdings in large-cap companies. Its portfolio may include both domestic and U.S.-listed foreign companies to provide enhanced industry representation.

Source: StockCharts.com

The fund currently trades around $241 and has a 0.62% yield. Its inception was in May 2000. With an expense ratio of 0.35%, the fund is relatively inexpensive to hold compared to other ETFs, and it has an average spread of 0.01%.

SMH seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS US Listed Semiconductor 25 Index (MVSMHTR), which is intended to track the overall performance of companies involved in semiconductor production and equipment. Plus, semiconductor stocks generally have pulled back in recent weeks, so those looking to gain exposure to the sector can do so now for a nice discount compared to just a month ago.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE


img
previous article

As a youth open to the world’s influence, you never know what will captivate your interest, and what will lead you to the paths you take in life. It was August 1974 when I, along with the rest of the world, watched then-President Nixon resign his office in disgrace. And while I was only 10 years old, thinking about that event brings me right back to the Southern California suburban home where I grew up, and right to the scene of my family watching our RCA console TV and, astonished, taking

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE