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Should You Invest in the Invesco Dynamic Semiconductors ETF (PSI)?

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The Invesco Dynamic Semiconductors ETF (PSI - Free Report) was launched on 06/23/2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Semiconductors segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $622.20 million, making it one of the larger ETFs attempting to match the performance of the Technology - Semiconductors segment of the equity market. PSI seeks to match the performance of the Dynamic Semiconductor Intellidex Index before fees and expenses.

The Dynamic Semiconductor Intellidex 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.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.55%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.56%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector--about 100% of the portfolio.

Looking at individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 6.32% of total assets, followed by Broadcom Inc (AVGO - Free Report) and Applied Materials Inc (AMAT - Free Report) .

The top 10 holdings account for about 46.99% of total assets under management.

Performance and Risk

So far this year, PSI has added roughly 29.08%, and it's up approximately 26.27% in the last one year (as of 06/27/2023). During this past 52-week period, the fund has traded between $85.66 and $134.72.

The ETF has a beta of 1.37 and standard deviation of 36.57% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Semiconductors ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PSI is an excellent option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

IShares Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index. IShares Semiconductor ETF has $8.37 billion in assets, VanEck Semiconductor ETF has $9.01 billion. SOXX has an expense ratio of 0.35% and SMH charges 0.35%.

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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