Semiconductor ETFs Surge on Warren Buffett's Stake Disclosure

Taiwan Semiconductor Manufacturing Company TSM was one of the star performers in Nov 15 trading session, jumping as much as 21% — its best day since 2008. Shares of TSM closed up 10.5% on the day. The massive gains were driven by Warren Buffett’s Berkshire Hathaway disclosure that it had purchased a $4.1 billion stake in the company.

This has fueled a rally in the semiconductor space, pushing ETFs and other stocks higher. As such, ETFs targeting the semiconductor space like VanEck Vectors Semiconductor ETF SMH, iShares Semiconductor ETF SOXX, SPDR S&P Semiconductor ETF XSD,  Invesco Dynamic Semiconductors ETF PSI and Invesco PHLX Semiconductor ETF SOXQ surged nearly 3% each.

In a filing with the United States’ Securities and Exchange Commission on Monday, billionaire investor Warren Buffett said it acquired about 60 million American depository shares in one of the world’s largest chipmakers in the third quarter.

Taiwan Semiconductor shares have been the the most beaten-down in the tech selling spree this year. With the latest gain, the stock is still down 32% year to date.

Taiwan Semiconductor is the biggest manufacturer of the world’s most advanced chips, which are used in smartphones, computers, servers, cars and military equipment. It makes chips for fabless semiconductor firms including Nvidia NVDA and Qualcomm QCOM. It also is the exclusive supplier of Apple's AAPL custom chips.

The stock saw positive earnings estimate revision of couple of cents for this year over the past 60 days and has estimated growth of 51.9%. It has a Zacks Rank #3 (Hold) with a VGM Score of B. Taiwan Semiconductor falls in the solid Zacks industry (in the top 37%), underscoring its strength in the coming days (read: 5 Tech ETFs At the Heart of Last Week's Rally).

Semiconductors have been the most important drivers of the overall growth in technology, given the use of chips in day-to-day life from cars, electronic gadgets to planes and weapons. The demand will continue to trend higher given the increased digitization in various corners like healthcare, transport, financial systems, defense, agriculture and retail, among others.

The rapid adoption of cutting-edge technology like cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, artificial intelligence, cryptocurrencies, 5G and other advanced information technologies should continue to fuel growth. Further, the introduction of expensive and new-generation chips has been leading to an enhancement in the product mix for semiconductors.

VanEck Vectors Semiconductor ETF (SMH)

VanEck Vectors Semiconductor ETF provides exposure to 25 companies involved in semiconductor production and equipment by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $7 billion and charges 35 bps in annual fees and expenses. Taiwan Manufacturing is the top firms, accounting for 10% share.

VanEck Vectors Semiconductor ETF is heavily traded with a volume of around 4.8 million shares per day and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

iShares Semiconductor ETF (SOXX)

iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket with TSM making up for 3.3% of assets.

iShares Semiconductor ETF has amassed $6.5 billion in its asset base and trades in a volume of about 1 million shares a day. The product charges a fee of 40 bps a year from investors and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: November Retail Sales Steady: 3 ETF & Stock Picks).

SPDR S&P Semiconductor ETF (XSD)

SPDR S&P Semiconductor ETF offers exposure to the semiconductor segment of the broad technology sector and tracks the S&P Semiconductor Select Industry Index. It holds 38 stocks in its portfolio. SPDR S&P Semiconductor ETF has AUM of $1.1 billion and an average daily volume of about 62,000 shares.

SPDR S&P Semiconductor ETF charges 35 bps in fees per year and has a Zacks ETF Rank #2 with a High risk outlook.

Invesco Dynamic Semiconductors ETF (PSI)

Invesco Dynamic Semiconductors ETF tracks the Dynamic Semiconductor Intellidex Index, holding 32 securities in its basket.

Invesco Dynamic Semiconductors ETF has AUM of $515.6 million and sees a moderate average daily volume of 21,000 shares. Expense ratio is 0.55%. PSI has a Zacks ETF Rank #1 with a High risk outlook.

Invesco PHLX Semiconductor ETF (SOXQ)

Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket (read: Semiconductor ETFs to Buy Now).

Invesco PHLX Semiconductor ETF has accumulated $75.1 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 49,000 shares.

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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
 
Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
 
VanEck Semiconductor ETF (SMH): ETF Research Reports
 
iShares Semiconductor ETF (SOXX): ETF Research Reports
 
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
 
Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports
 
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