3 Semiconductor ETFs That Continue To Shine

The technology sector continues to dominate headlines with announcements from Apple Inc (AAPL) of a new iPhone and Microsoft Corp (MSFT) purchasing the popular Minecraft franchise.  However, one technology sub-industry in particular has been quietly and resolutely moving higher since the beginning of the year.

TheiShares PHLX Semiconductor ETF (SOXX) tracks 31 companies engaged in the design, manufacture, and distribution of semiconductor chips in the United States.   This ETF has exposure to some of the biggest and best stars of the technology realm that include Intel Corporation (INTC) and Micron Technology (MU). 

SOXX is the largest of the dedicated semiconductor ETFs with a total asset base of $540 million and an expense ratio of 0.47 percent. 

So far this year, SOXX has gained nearly 22 percent versus 13.5 percent for the broader Technology Select Sector SPDR (XLK).  This outperformance has largely been driven by strong global demand for desktop and mobile chips.

Investors are taking notice of this performance as well.  According to Bloomberg data, semiconductor ETFs have taken in more than $350 million in new assets this year and may continue to shine in the second half of 2014 as back to school and holiday demand drives electronics sales.

That strength has also been beneficial to the Market Vectors Semiconductor ETF (SMH), which has nearly identical performance of SOXX this year.  The biggest difference in this ETF is that the asset allocation of the underlying stocks is skewed to the largest companies.  Intel makes up nearly 22 percent of the total portfolio.

If you are yearning for a semiconductor ETF with a more balanced weighting, the SPDR S&P Semiconductor ETF (XSD) may be just what you need.  XSD invests in 49 holdings with each stock having a similar pull on the total return of the fund. 

This creates a more balanced asset allocation that benefits the smaller companies in the index.  So far this year, XSD has profited from that unique construction methodology with returns of 25 percent.  This leads the top unleveraged ETFs in this group.