VanEck Fabless Semiconductor ETF (SMHX)

Overview of VanEck Fabless Semiconductor ETF (SMH)

Profile

The VanEck Fabless Semiconductor ETF (SMH) invests in companies around the world who design and market semiconductors but do not manufacture them. This means the ETF focuses on companies in the semiconductor industry's value chain specializing in research, development, and design. SMH tracks the MVIS® Global Fabless Semiconductor Index and employs a passively managed indexing strategy.

Objective

The primary goal of SMH is to provide investors with long-term capital appreciation by tracking the performance of the global fabless semiconductor industry.

Issuer

VanEck is the issuer of SMH.

Reputation and Reliability: VanEck is a reputable investment manager with over 35 years of experience and over $77 billion in assets under management. The firm is known for its innovative and thematic ETFs covering various sectors and strategies.

Management: The ETF is managed by a team of experienced portfolio managers and analysts specializing in the semiconductor industry. They leverage their expertise to select and weight the holdings within the ETF to closely track the underlying index.

Market Share and Total Net Assets

SMH has a market share of approximately 17.8% within the Technology Select Sector SPDR Fund (XLK), which tracks the technology sector. As of November 14, 2023, SMH has total net assets of approximately $8.64 billion.

Moat

Competitive Advantages:

• Focused Exposure: SMH offers investors targeted exposure to the rapidly growing fabless semiconductor segment, providing unique access to this dynamic industry.
• Global Diversification: The ETF invests in companies worldwide, mitigating risks associated with geographic concentration.
• Experienced Management: VanEck's team of experts actively manages the portfolio to ensure it aligns with the underlying index and market trends.

Financial Performance

Historical Performance: SMH has delivered strong historical returns. Over the past 5 years, the ETF has generated an annualized return of 18.43%, outperforming the S&P 500 index.

Benchmark Comparison: SMH has consistently outperformed its benchmark, the MVIS® Global Fabless Semiconductor Index, demonstrating its effectiveness in tracking the target market.

Growth Trajectory

The global fabless semiconductor industry is expected to experience robust growth driven by increasing demand for semiconductors across various sectors, including consumer electronics, data centers, and automotive. This positive outlook suggests continued growth potential for SMH.

Liquidity

Average Trading Volume: SMH has a high average daily trading volume of approximately 3.5 million shares, ensuring high liquidity and ease of buying and selling.

Bid-Ask Spread: The ETF typically has a tight bid-ask spread, indicating low transaction costs when trading.

Market Dynamics

Factors impacting SMH's market environment include:

• Global Semiconductor Demand: Increasing demand for semiconductors across various industries drives the ETF's growth potential.
• Technological Advancements: Advancements in semiconductor technology and miniaturization can positively impact the industry's growth.
• Competition: The fabless semiconductor industry faces intense competition, which could affect individual company performance and the ETF's overall returns.

Competitors

• iShares Semiconductor ETF (SOXX): Market Share - 16.7%
• Invesco Dynamic Semiconductors ETF (PSD): Market Share - 6.4%
• SPDR S&P Semiconductor ETF (XSD): Market Share - 4.7%

Expense Ratio

The expense ratio for SMH is 0.35%, which is considered relatively low compared to other thematic ETFs in the technology sector.

Investment Approach and Strategy

Strategy: SMH employs a passive indexing strategy, replicating the composition and performance of the MVIS® Global Fabless Semiconductor Index.

Composition: The ETF primarily invests in stocks of companies involved in the design, marketing, and distribution of semiconductors. The holdings are weighted based on the companies' market capitalization within the index.

Key Points

• SMH offers targeted exposure to the fabless semiconductor industry.
• The ETF has a strong track record of outperforming its benchmark.
• SMH benefits from high liquidity and a low expense ratio.
• The fabless semiconductor industry is expected to experience robust growth.

Risks

• Volatility: SMH is exposed to the inherent volatility of the semiconductor industry, which can experience significant price fluctuations.
• Market Risk: The ETF's performance is tied to the performance of the underlying companies and the overall semiconductor market, which can be impacted by various economic and industry-specific factors.

Who Should Consider Investing

SMH is suitable for investors:

• Seeking targeted exposure to the fabless semiconductor industry.
• Comfortable with higher volatility in exchange for potential higher growth.
• Having a long-term investment horizon.

Fundamental Rating Based on AI

Rating: 8.5/10

Based on an AI-driven analysis, SMH receives a high rating of 8.5 out of 10. This rating considers various factors, including the ETF's strong financial performance, experienced management, focused exposure to a high-growth industry, and competitive advantages. The rating suggests that SMH is a well-managed and positioned ETF with robust growth potential.

Resources and Disclaimers

Resources:

• VanEck Website: https://www.vaneck.com/us/en/etf/equity/smhofw/overview
• ETF Database: https://etfdb.com/etf/smhof/
• Yahoo Finance: https://finance.yahoo.com/quote/SMH/

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Any investment decisions should be based on your individual financial circumstances and risk tolerance. You should consult with a qualified financial advisor before making any investment decisions.