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A smaller, cheaper semiconductor ETF has quietly left the industry's most popular chip fund in the dust this year, and the reason comes down to one name that SMH owns a lot of and its rival barely touches.
SMH delivered a jaw-dropping year, yet three semiconductor funds quietly left it in the dust by betting on corners of the chip market that most investors completely ignored.
CHPS has returned 137% over the past year while still trading at forward multiples below its own historical average. The top five holdings, weighted 23.59% combined, trade at PEG ratios near or below 1.0x, supporting the current valuation. Information technology's forward P/E sits below its five- and ten-year averages, reinforcing the case that CHPS remains reasonably priced.
Xtrackers Semiconductor Select Equity ETF (CHPS) offers diversified semiconductor exposure with a unique ESG-weighted approach and reduced mega-cap concentration. I recommend CHPS with a Buy rating, driven by durable long-term growth prospects in AI, memory, logic, and analog chips. CHPS benefits from top holdings in Micron, SK Hynix, AMD, and Intel, all positioned to capitalize on evolving AI and data center architectures.
Investors on the lookout for potential break out candidates among ETFs can look for a few key factors in charts, global trends, and momentum. Trends, too, can guide investors and advisors to ETFs able to break out.
Some exchange-traded funds offer the safety of diversification at the expense of eye-popping returns. This year, returns are the story, especially at funds that hold big slugs of red-hot chip shares.
Invesco Semiconductors ETF has outperformed the newer Xtrackers Semiconductor Select Equity ETF, delivering a 6.5% total return in under a quarter. PSI's edge stems from its concentrated U.S.-only portfolio, high 78% turnover, and a quant-driven strategy focused on momentum, management, and valuation. CHPS, with a lower 0.15% expense ratio and 25% Asian exposure, follows an ESG-screened, globally diversified approach but lacks PSI's IP-rich U.S. focus.
No longer reserved for niche investment strategies, Environmental, Social, and Governance (ESG) principles are on track to become a major consideration for investors as climate change, geopolitics, and energy usage become increasingly important to companies across sectors. PricewaterhouseCoopers has predicted that ESG will continue to be a dominant feature in exchange-traded fund (ETF) launches.
SEC filings for CHPS aren't indexed yet — common for recently launched funds. Browse the issuer's filings on SEC EDGAR directly.