SMH ETF Is One of the Fastest Growing ETFs in 2023
πππGiven the rise of Artificial Intelligence this year, Semiconductor stocks have witnessed explosive returns. OpenAI's revolutionary ChatGPT chatbot, the US ban on some semiconductor exports to China and $NVIDIA Corp(NVDA)$
sizzling rally are all testament to the importance of this sector. With significant growth in AI expected through the next decade and beyond, $VanEck Vectors Semiconductor ETF(SMH)$ is one of the fastest growing ETFs in 2023. SMH gives a diversified exposure in semiconductor companies at a low affordable cost in just 1 trade.
The Top 10 holdings include Nvidia, $Taiwan Semiconductor Manufacturing(TSM)$
Broadcom, ASML, $Advanced Micro Devices(AMD)$
Qualcomm, Applied Materials, Texas Instruments and Analog Devices.
Nvidia is the top holding with 19% weightage followed by Taiwan Semiconductor Manufacturing at 13%. The Top 2 commands 32% of the weightage and the Top 10 has 72% weightage.
Nvidia is the market's runaway favourite way to bet on the explosive growth of Generative AI. Nvidia has the outsized returns and Trillion dollar market capitalisation to prove it. Its share price is up a staggering 237% year todate.
TSMC is responsible for making 90% of the world 's most advanced chips. Most chip Producers outsource actual production of their chips to TSMC. TSMC share price is up 31% year todate due to its huge Manufacturing capacity and wide moat in this sector.
Apart from Nvidia, AMD is one of the few semiconductor companies that can produce AI chips. In mid June 2023, AMD rolled out its new Instinct MI300 series chips which could be popular for customers looking to accelerate their Generative AI chip processing. AMD is up a huge 85% year todate.
SMH's expense ratio is 0.35%. Assets Under Management is USD 9.23 billion. The current dividend yield is 0.87%. SMH goes ex dividend on December 18, 2023.
Performance wise SMH ETF is up 5% in the past 5 days and a huge 56% year todate.
Wall Street Analysts are bullish on SMH ETF with a Buy rating, Target price of USD 184.06, an upside potential of 17%.
There are so many great Semiconductor stocks to choose from that it is not easy to pick a winner. With SMH ETF, I can have it all in 1 great basket of the best semiconductor stocks. I don't have to read company reports and even if there is negative news in one of the stocks, the other stocks would help to minimise the impact.
At the last closing price of USD 157.28 compared to Nvidia at USD 483.35, SMH ETF provides excellent value for money. The Global spending on semiconductors will rise to USD 1 Trillion by 2030, up from just USD 570 billion in 2022. That's why SMH ETF will continue to be one of the Fastest Growing ETFs in the years ahead and that's why it is a great tactical play to include it in my portfolio.
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