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Investors are Taking Profits in This Semiconductor ETF

Monday, October 3, 2016 8:57
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MicrochipTrading volume was well above average levels for most of the month of September for the largest Semiconductor-based ETF in the U.S. listed landscape, the VanEck Vectors Semiconductor ETF (NYSE:SMH).

There has also been noticeable position trimming in this fund, as more than $200 million has left SMH in the past couple sessions into strength in the sector. Notably, SMH has an expense ratio of 0.35%, and boasts $534 million in assets under management.

The top holdings in the fund are as follows: 1) INTC (15.48%), 2) TSM (14.75%), 3) QCOM (9.17%), 4) BRCM (5.55%), 5) NXPI (5.08%). SMH still maintains a small lead over the next largest ETF in the Semiconductor ETFs space, where SOXX (iShares PHLX Semiconductor, Expense Ratio 0.47%) currently has about $478 million in assets under management, including mild year-to-date outflows of about $31 million leaving the fund.

SOXX’s equity exposure differs noticeably from SMH, where the top four holdings in the fund have roughly equal weights (as opposed to about 15% weightings to INTC and TSM respectively, and we see the following specifics in terms of portfolio exposure: 1) QCOM (8.18%), 2) TXN (8.18%), 3) AVGO (8.15%), 4) INTC (8.10%) and 5) NXPI (6.64%).

Given the presence of profit takers lately in SMH, it makes sense for us to pay attention to the “Bear” funds in this space for possible heightened activity in the short term, namely SOXS (Direxion Daily Semiconductor Bear 3X, Expense Ratio 0.95%, $49 million in AUM) and SSG (ProShares UltraShort Semiconductors, Expense Ratio 0.95%), which is considerably smaller at only $6.9 million in AUM.


SMH shares fell $0.31 (-0.45%) to $69.16 in Monday morning trading. Year-to-date, SMH has gained 30%, versus a 6% rise in the benchmark S&P 500 during the same period.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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