Benzinga - The U.S. semiconductor space has always been a major focus on Wall Street. The broader market has been volatile in 2023, but so far it has been a good year, despite numerous headwinds. The old days of a relentless bull market, zero interest rates, and low inflation, however, are long gone. But as Jim Cramer says, “There is always a bull market somewhere.” It’s actually a pretty good quote, and quite true! One bull market that is playing out in the U.S. equity market right now is in the semiconductor space. Here is a look at Benzinga’s ETF suggestions to take advantage of the rise in chip stocks this week.
Columbia Seligman Semiconductor and Technology ETF (NYSE: SEMI)
What jumps out right away about this fund from Columbia Seligman is the names in its top holdings are not the first you think of when you think of the semiconductor sector as a whole. These include Synopsys (NASDAQ: SNPS), a $60 billion dollar Mountain View, California firm, and Synaptics (NASDAQ: SYNA), also based in Silicon Valley, but with a small $4 billion market cap. Other top holdings include Applied Materials (NASDAQ: AMAT), KLA Corp. (NASDAQ: KLA), and Lam Research (NASDAQ: LRCX). Year-to-date, SEMI shares have climbed nearly 15% and this ETF is an attractive way to bet on continued gains in the chip space in the coming weeks. From a near-term technical perspective, SEMI has been range bound for a couple of months and traders may want to watch for a breakout to the upside which would be triggered by a move above $19. The ETF closed on Thursday at $17.63. One important note with regard to SEMI is that the ETF is extremely illiquid and is absolutely not a vehicle for traders looking to get in and out with big positions.
Strive U.S. Semiconductor ETF (NYSE: SHOC)
This is a passively managed ETF designed to give traders and investors exposure to the U.S. semiconductor industry. Year-to-date, shares have climbed more than 20% and remain in an uptrend heading into the weekend. What is different about SHOC vs. SEMI, is that there is a collection of leading names in the portfolio that did not make an appearance in the top 10 holdings of SEMI. For this reason, traders could buy both ETFs together for more diversified exposure to chips. There is, however, some overlap, which is to be expected. SHOC has a nearly 12% weighting in red-hot Nvidia (NASDAQ: NVDA). Qualcomm (NASDAQ: QCOM), Intel (NASDAQ: INTC), AMD (NASDAQ: AMD), and Texas Instruments (NASDAQ: TXN) also make appearances in SHOC’s top 10. Similar to SEMI, the Strive US Semiconductor ETF is quite illiquid and as a result is a vehicle better suited to longer-term swing traders and investors.
VanEck Semiconductor ETF (NASDAQ: SMH)
This is one of the Street’s most heavily traded sector ETFs and it remains a mainstay and a great vehicle for gaining targeted exposure to the chip industry. Performance has been tremendous so far in 2023, with shares jumping better than 25%. At $8 billion in assets, this is a liquid vehicle that even big traders can move in and out of effortlessly. The two biggest holdings by far in this ETF portfolio are Taiwan Semiconductor (TSM), which is up around 18% on the year and Nvidia, which has soared almost 90% since January 1.
The bull market in semiconductors was not hard to find and all of the charts appear intact from a technical perspective. Traders that like to use ETFs as opposed to equities can achieve full diversification and exposure to this hot market sector using these 3 vehicles. They complement each other nicely as each portfolio is constructed differently and has different exposures. The advantage of trading this way is broad exposure and far lower risk than just buying NVDA and QCOM for example.
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