Driven in large part by the hardware demands of artificial intelligence (AI), chip stocks have been going gangbusters for a couple of years now.
There are dozens of stocks in the space that I’m willing to bet you’ve heard of, like Nvidia (NVDA +4.30%), Taiwan Semiconductor Manufacturing Co. (TSM +5.08%), Micron Technology (MU +3.03%), and ASML Holding (ASML +2.81%), to name just a few.
The only problem your everyday investor might have in getting into the space is that the AI chip rally has pushed the prices of many of those companies into the stratosphere.
Fortunately, there is a way for investors to get access to all of the stocks I mentioned, and 22 more, in a single ticker that runs about $450 per share. Price is not value, but that could be a doable sum for many investors. The VanEck Semiconductor ETF (SMH +5.10%) is worth a look.
Image source: Getty Images.
Single-ticker chip-and-shovel play
The chip industry is a pick-and-shovel play for the entire tech industry. No matter which AI software company is making headlines this week, there are only a handful of chip designers and manufacturers providing the industry with the hardware it needs.
Like most ETFs, the name of the VanEck Semiconductor ETF tells you a lot about it. It owns shares of the top companies in the chip industry and attempts to mimic the price, yield, and performance of the MVIS US Listed Semiconductor 25 Index.
One share of VanEck Semiconductor gives you access to all the stocks I’ve already mentioned and more, like Broadcom (AVGO +0.62%), Advanced Micro Devices (AMD +13.85%), and Qualcomm (QCOM +11.19%). The bulk of the ETF’s holdings, just shy of 78%, are based in the United States, with the remainder dominated by companies in Taiwan and the Netherlands.
The ETF’s expense ratio is fairly low at 0.35%, and the ETF’s returns have been pretty spectacular, to say the very least. Quite frankly, the VanEck Semiconductor ETF’s performance makes the most compelling case for its inclusion in your portfolio more than anything else.
VanEck ETF Trust – VanEck Semiconductor ETF
Today’s Change
(5.10%) $24.59
Current Price
$506.44
Key Data Points
Day’s Range
$495.46 – $509.59
52wk Range
$203.89 – $509.59
Volume
13M
Year to date, it’s up 26%, which outperforms several of the individual stocks in its holdings, like Nvidia, which is up 6% year to date; Broadcom, which is up 16%; and ASML, which is up 25%.
In the past 12 months, the ETF has handed its shareholders an almost 82% return. Since its inception in 2011, VanEck Semiconductor has averaged 27% returns annually. For an investor, that’s risking far less money up front than buying shares in even a fraction of the ETF’s holdings individually.
Set it, forget it, profit
With low expenses and great returns that are outpacing several of the companies it tracks in the midst of a chip industry rally, the VanEck Semiconductor ETF certainly is worthy of consideration by investors.
Like many ETFs, it makes for a fantastic set-it-and-forget-it investment to profit from the industry it tracks in a relatively low-risk way and for a smaller up-front cost than buying a selection of the individual stocks it tracks.
The AI trend driving growth in the chip industry isn’t going away anytime soon. Even with the hype around AI cooling a bit this year, there are still over 3,000 data centers either planned or under construction around the country.
And if you’re looking for the easiest way to profit from every big player in the chip industry, the VanEck Semiconductor industry is a great one-ticker way to do it.
