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Thursday, July 19, 2012

ETF Spotlight: Semiconductors

Image representing iPhone as depicted in Crunc...
Image via CrunchBase
Semiconductor stocks and related exchange traded funds have been pummeled over the second quarter, but the low prices may appeal to contrarian investors as the sector may continue to benefit from new innovations.
“Although the PC end market may well be stalled, the industry stands to continue to benefit from the new releases of a wide variety of technology products, such as Apple’s (NasdaqGS: AAPL) new iPhone and computer hardware makers’ new Ultrabook innovation,” according to Morningstaranalyst Robert GoldsboroughAccordingly, Morningstar recommends the Market Vectors Semiconductor ETF (NSYEArca: SMH) as the best way to gain exposure to semiconductors. The fund holds 25 of the largest semiconductor companies, has a 0.35% expense ratio and trades at 85% of its fair value. Country allocations include U.S. 72%, Taiwain 13%, Netherlands 5%, U.K. 4%, Singapore 3% and Bermuda 2%.
The current bought of weakness in semiconductors is a reflection on the cyclical nature of the sector.
“Also, as the economy continues its long slog toward recovery, we expect corporate spending on IT – and especially on data center technology and networking infrastructure, both of which need semiconductors – to remain strong,” Goldsborough added. ... Continue to read.
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