Is Invesco Dynamic Semiconductors ETF (PSI) a Strong ETF Right Now?

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Designed to provide broad exposure to the Technology ETFs category of the market, the Invesco Dynamic Semiconductors ETF (PSI) is a smart beta exchange traded fund launched on 06/23/2005.

– Zacks

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is managed by Invesco. PSI has been able to amass assets over $867.63 million, making it one of the average sized ETFs in the Technology ETFs. This particular fund seeks to match the performance of the Dynamic Semiconductor Intellidex Index before fees and expenses.

The index is comprised of stocks of semiconductor companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.12%.

Sector Exposure and Top Holdings

It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

For PSI, it has heaviest allocation in the Information Technology sector –about 97.60% of the portfolio.

Taking into account individual holdings, Nvidia Corp (NVDA) accounts for about 5.44% of the fund’s total assets, followed by Kla Corp (KLAC) and Broadcom Inc (AVGO).

PSI’s top 10 holdings account for about 45.69% of its total assets under management.

Performance and Risk

The ETF has added roughly 43.70% and it’s up approximately 63.72% so far this year and in the past one year (as of 11/16/2021), respectively. PSI has traded between $92.80 and $150.63 during this last 52-week period.

The fund has a beta of 1.25 and standard deviation of 36.83% for the trailing three-year period, which makes PSI a high risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Semiconductors ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

VanEck Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index. VanEck Semiconductor ETF has $6.82 billion in assets, iShares Semiconductor ETF has $9.05 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
 
NVIDIA Corporation (NVDA): Free Stock Analysis Report
 
KLA Corporation (KLAC): Free Stock Analysis Report
 
Broadcom Inc. (AVGO): Free Stock Analysis Report
 
VanEck Semiconductor ETF (SMH): ETF Research Reports
 
iShares Semiconductor ETF (SOXX): ETF Research Reports
 
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