A Look at the Top Performing ETFs
The semiconductor market has been a hot topic in recent years, with the increasing demand for technology and the global shortage caused by the pandemic. As the industry starts to recover, investors are looking for opportunities to capitalize on this growing market. We discuss the top performing semiconductor ETFs that provide exposure to market leaders like NVIDIA Corporation, Taiwan Semiconductor Manufacturing Company Limited, and Advanced Micro Devices, Inc.
The pandemic-induced supply chain disruption and the shift towards an online model have caused major delays in production for components used in electronics. As a result, the semiconductor industry has seen a decrease in chip sales and a decrease in monthly sales in major regions like Europe, Asia, and America. The industry is expected to bounce back in 2024, with an estimated 12% growth, driven by the Memory segment.
According to Fortune Business Insights, the semiconductor market size is expected to grow from $528 billion in 2021 to $1381 billion in the next 7 years. This growth can be attributed to the increased dependence on the internet-of-things and the demand for integrated chips in industries like automotive, artificial intelligence, machine learning, and cloud computing.
Recently, KPMG interviewed over 150 executives in the semiconductor space, and 81% of them expect revenues to increase as supply chain issues start to ease up in 2023. This is a positive sign for the industry, as excess inventory is expected to alleviate in the coming months. Gartner also reports that the demand for computers and smartphones is stabilizing, while the industrial, automotive, and military sectors are set to dominate the demand, leading to more business spending in the semiconductor industry.
The first ETF on our list is the Direxion Daily Semiconductor Bull 3X Shares (SOXL). This ETF has a 5-year share price performance of 1,200% and provides investors with exposure to companies like NVIDIA Corporation, Taiwan Semiconductor Manufacturing Company Limited, and Advanced Micro Devices, Inc Its top holdings include NVIDIA Corporation (8.68%), Taiwan Semiconductor Manufacturing Company Limited (8.36%), and Advanced Micro Devices, Inc (7.97%).
Next, we have the VanEck Vectors Semiconductor ETF (SMH), with a 5-year share price performance of 500%. This ETF provides exposure to companies like Taiwan Semiconductor Manufacturing Company Limited, Intel Corporation, and NVIDIA Corporation. Its top holdings include Taiwan Semiconductor Manufacturing Company Limited (14.33%), Intel Corporation (9.76%), and NVIDIA Corporation (8.91%).
The iShares PHLX Semiconductor ETF (SOXX) has a 5-year share price performance of 500% and provides investors with exposure to companies like NVIDIA Corporation, Intel Corporation, and Texas Instruments Incorporated. Its top holdings include NVIDIA Corporation (8.59%), Intel Corporation (8.44%), and Texas Instruments Incorporated (8.22%).
The semiconductor market is expected to see significant growth in the coming years, driven by the increasing demand for technology and the recovery from the pandemic-induced supply chain disruption.
