5 Top-Ranked Chip ETFs Worth Your Attention Now

This story originally appeared on Zacks

The semiconductor space has received a good boost from the ongoing COVID-19 pandemic as the demand for consumer electronics such as PCs, laptops, and smartphones has skyrocketed. Notably, the chip market has seen strength in end markets such as mobile phones, laptops, servers, cars, smart home, games, wearable devices and Wi-Fi access points, according to an International Data Corporation (IDC) report.

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The space has also seen exponential demand with the increasing use of electronic vehicles along with the advancement of the automotive sector in particular to include more electronic components in chip-based vehicles. The trends of work from home and web-based learning caused by the coronavirus have spurred demand for chips from computer manufacturers and data center operators.

However, the increasing demand for semiconductors is not being matched by adequate supplies and has led to higher prices. Previously, the chip supply crisis affected the auto industry only, but now manufacturers of smartphones and electronic goods bear the brunt. In fact, the consultancy Forrester expects the chip shortage to continue through 2022 and into 2023, which is concerning. The introduction of new, expensive chips has also improved the product mix for semiconductors (according to a CNBC article).

A report by trade credit insurer Euler-Hermes forecasts the semiconductor space, which saw sales rise 26% to $553 billion in 2021, to see a further increase in sales of 9% and exceed $600 billion for the first time in 2022. In this In connection, analysts at Euler Hermes commented that “the current semiconductor cycle has been running on all cylinders since the industry emerged from its worst recession in 2019,” according to a CNBC article.

Semiconductor ETFs poised for gains

The increasing adoption of cloud computing and the continued introduction of artificial intelligence, machine learning and the Internet of Things are expected to create strong opportunities in 2022. Moreover, the revolutionary 5G platform is expected to act as a major catalyst for semiconductor revenue in the mobile market.

Investors aiming to make the most of this upside in a diversified manner can consider the following ETFs:

iShares Semiconductor ETF SOXX

The iShares Semiconductor ETF follows the ICE Semiconductor Index and provides exposure to 30 companies. The fund has raised $10.01 billion in its asset base. It charges 43 basis points in fees annually from investors. It has a Zacks ETF Ranked #1 (strong buy) with a risky outlook (read: bet these 5 zones ETFs for 2022).

VanEck Semiconductor ETF SMH

This fund provides exposure to 25 securities by tracking the US-listed MVIS Semiconductor 25 Index. The product manages $8.27 billion in assets and charges 35 basis points in annual fees and expenses. The fund currently holds a #1 Zacks ETF rating with a risky outlook (read: 3 sector ETFs to win despite soft manufacturing data).

First Trust Nasdaq Semiconductor ETF FTXL

This fund seeks investment results that are generally consistent with the price and return, before fees and expenses, of the Nasdaq Smart Semiconductor Index. FTXL has raised $118.8 million in assets under management. The expense ratio is 0.60%. FTXL currently has a Zacks ETF rating of 2 (Buy).

Invesco Dynamic Semiconductors ETF PSI

This fund tracks the Dynamic Semiconductor Intellidex Index, which holds 32 securities in its basket. The product has management assets of 917.9 million dollars. The expense ratio is 0.56%. PSI has the Zacks ETF rated #1 right now with a high-risk outlook (read: 5 of the best ETFs on the market, the best ETFs of 2021).

SPDR S&P Semiconductor ETF XSD

This fund tracks the S&P semiconductor industry index. The fund has assets under management of $1.58 billion. It charges 35 basis points in fees per year. The product is a Zacks ETF Ranked #1, currently, with a high-risk outlook.

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Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports

VanEck Semiconductor ETF (SMH): ETF Research Reports

iShares Semiconductor ETF (SOXX): ETF Research Reports

SPDR S&P Semiconductor ETF (XSD): ETF Research Reports

First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports

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