Semiconductor ETF

As semiconductors are used in making computer chips we might call this semiconductor ETF the Chip-ETF. Many applications demand stronger and more powerful computer chips and the variety of applications is expanding as well.

The chances of mergers and acquisitions in this semiconductors market is big but on the other hand one does not expect many newcomers to the market. My expectation will be that this market will consolidate even more as it is in the near future. 

VanEck Vectors Semiconductor ETF

VanEck Vectors has built its own semiconductor ETF. Within this semiconductor ETF 25 companies are included. All these companies act on a global scale but VanEck Vectors only will list them if they have a quotation in the United States, a somehow peculiar way of composing an index. For investors though this approach is not so bad as companies that are active on multiple exchanges attract more investors.

The more trading the more stable the prices are and the lower the spread. Of course this multiple quotation strategy is only manageable for the very large companies. When I take a look at the semiconductor market I believe this market is still on a solid growth path.

One would not be surprised to find Intel as the dominating factor in this semiconductor ETF. With a 20% share they are the number 1 company here. Behind Intel you will find Taiwan Semiconductor Manufacturing and third on the list is ASML form The Netherlands with a 6% share just ahead of Texas Instruments with a 5% share.

On the 7th spot you will find NXP Semiconductor with a 4% share, both ASML and NXP have their roots at Philips (the Dutch based consumer electronics and health giant).

Geographically speaking the United States overshadow other countries with a 70% share, then you will find Taiwan with a 15% share and The Netherlands with a 10% share.

This VanEck Vectors Semiconductor ETF is a physical ETF so they buy the underlying stocks. Dividends are paid out on a yearly basis.

Generally speaking investors have had a very optimistic view on the semiconductor market which results in a very high priced semiconductor ETF with high price-earnings ratios. This may effect in large corrections which are the ideal point of entry.

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VanEck Vectors Semiconductor ETF info:

 

ETF provider: VanEck Vectors ( Van Eck Global)

Ticker: SMH

ISIN: US92189F6768

Currency: Dollar

Exchange: NYSE Arca