Proprietary Data Insights
Financial Pros’ Top Semiconductor ETF Searches in the Last Month
Financial Pros Top ETF for AI
Our TrackStar Data confirms what most of us assumed…AI stocks are red hot!
Search volume amongst retail and financial pros skyrocketed for companies like NVIDIA (NVDA) and c3.AI (AI).
While there are some ‘AI’ ETFs out there, they don’t do a particularly good job of investing in the space.
In fact, our data picked up a different tact by financial pros.
Instead of looking at esoteric technology ETFs, they’re focused on semiconductor ETFs, particularly the VanEck ETF (SMH).
It’s a simple story, really…
AI = Processing Power = Semiconductors
So, if you’re looking for an investment strategy straight from the financial pros playbook, here’s why you should consider the SMH.
Key Facts About SMH
VanEck’s SMH ETF tracks the MVIS® US Listed Semiconductor 25 Index, which is comprised of companies involved in semiconductor production and equipment.
The SMH is the most popular in the market in terms of total assets under management to daily trading volume.
Because of this, investors can either invest directly in the ETF or use options.
While the ETF only holds 25 stocks, it includes the who’s who of the semiconductor world. And anyone familiar with AI and microprocessors is sure to recognize the top holdings on this list.
The semiconductor space comprises big players, which is why the weighted average market cap for the ETF is $306 billion.
And that makes sense when you think about it. The startup costs associated with a fabrication facility are astronomical, while design specialists tend to get bought up by the big players.
The average investor probably assumes semiconductor stocks are up hundreds of percentage points over a 5-year period.
In actuality, only a couple of players have done so, and many quite recently, as noted by the YTD gains below.
Still, a total 5-year gain of 177% is nothing to sneeze at.
Equally impressive is the 10-year average gain, highlighting the consistent demand.
If you’re looking for a semiconductor ETF, there are quite a few out there, each with a slightly different flavor.
This list of ETFs is a perfect example of why simpler is better. The last two ETFs, where fund managers try to gain an edge through some methodology tweak, are the worst performers.
Our Opinion 10/10
We expect AI investments are at the beginning stages of a supercycle.
While not every semiconductor company will benefit, we like the SMH given its heavier weighting towards those companies.
With ample liquidity, it should be a staple for any model portfolio.
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