To The Moon

🌟🌟🌟The annual global spending on semiconductors is expected to reach at least USD 1 Trillion by 2030.  In 2022 global spending on semiconductors was USD 570 billion according to Semiconductor Industry Association. 

Picking the top performing semiconductor stocks can be tricky as their performance are  highly volatile.  What if you can have the best semiconductor stocks perfectly bundled in 1 ETF or perhaps 2 ETFs? 

Introducing $VanEck Vectors Semiconductor ETF(SMH)$ and $Semiconductor Bull 3X Shares(SOXL)$  

Which is a Better Buy? 

SMH ETF is an ETF that invests in 25 of largest and best performing semiconductor stocks.  

SOXL ETF seeks daily investment results of 300% of the performance of the NYSE Semiconductor Index.  It is a leveraged ETF turbo charged by 3x to amplify the returns of the index mentioned. 

The Top 10 holdings of SMH includes $NVIDIA Corp(NVDA)$  

$Taiwan Semiconductor Manufacturing(TSM)$  

$Advanced Micro Devices(AMD)$  

Broadcom, ASML, Intel, Qualcomm, Applied Materials, Lam Research and  Texas Instruments.  

Nvidia is the Top holding in SMH with 19% weightage followed by TSMC at 12.8%.  The Top 10 holdings weightage is 72.5%.

In contrast SOXL's Top holdings is AMD, Broadcom, Nvidia, Intel, Texas Instruments, Micron Technology,  NXP Semiconductors, Qualcomm, Analog Devices and Microchip Technology. 

Nvidia only takes up 7.5% of the total holdings. 

SOXL does not include foreign chips stocks. 

The Top 10 holdings' weightage is 57%.

SMH expense ratio is 0.35% versus SOXL at 0.94%.

SMH's current distribution yield is 0.74% paid annually.  SMH goes ex dividend on December 18 2023.  In comparison SOXL 's current distribution yield is 0.59% paid quarterly.  It goes ex dividend on December 21 2023.

Performance wise SMH ETF is up 57.7% year todate while SOXL, being a leveraged ETF is up 138% year todate.

SMH versus SOXL - Which is a Better Buy?

It depends on an individual investor 's goal and risk appetite.

SMH is a great ETF to buy and hold long term and does not require constant monitoring.  In contrast, SOXL is a great ETF for the active investor or trader who loves to monitor his portfolio daily.  SOXL is more of a trading ETF and takes  advantage of short term trends.  SOXL is a powerful tool and can amplify returns but only if you get the direction right.  SOXL is certainly not meant for long term holding as its returns may be adversely affected due to the leveraged nature of the ETF.   SOXL is definitely not suitable for the risk adverse investor. 

To sum it up, SMH is a great ETF to buy and hold long term without the need to constantly monitor it.  SOXL is a Turbo Charged ETF meant for daily monitoring  but can be a powerful tool to amplify your returns. 

The choice is yours - Slow and Steady or High Risk High Reward.

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