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Semiconductor Sales Rebounding on Growing Demand: 3 Funds to Buy
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Semiconductor sales are increasing steadily as price pressures are subsiding and demand is showing a recovery. Also, continued enthusiasm surrounding artificial intelligence (AI), particularly generative AI, has been driving up sales.
The semiconductor industry suffered in 2023 but has been trying to rebound and is projected to grow at a robust pace this year. Investing in semiconductor funds like Janus Henderson Global Technology and Innovation Fund (JNGTX - Free Report) , Red Oak Technology Select (ROGSX - Free Report) and Fidelity Select Semiconductors Portfolio (FSELX - Free Report) thus appears to be a prudent choice.
Semiconductor Sales Rebounding
Global semiconductor sales reached $51.3 billion in July, up 18.7% from the year-ago levels of $43.2 billion, the Semiconductor Industry Association (SIA) said on Tuesday. Compared to the previous month’s total of $50 billion, sales rose by 2.7% in July.
John Neuffer, SIA president and CEO, said “The global semiconductor market continued to grow substantially on a year-to-year basis in July, and month-to-month sales increased for the fourth consecutive month.”
Easing inflation is helping boost semiconductor sales, with reduced price pressures leading to a rebound in demand. Inflation declined sharply in the second quarter after rising in the first quarter when semiconductor sales slowed.
The Federal Reserve believes that inflation is now on track to reach its 2% target. The Federal Reserve is preparing to initiate its easing cycle after increasing interest rates to a 23-year high.
Market participants are predicting a 25-basis point reduction this month. Lower interest rates generally benefit growth assets by decreasing the opportunity cost of holding non-yielding assets, such as technology and semiconductor stocks.
AI Enthusiasm Boosting Semiconductor Demand
This year’s tech has been largely influenced by NVIDIA Corporation. As a leading player in the semiconductor industry, NVIDIA has been at the forefront of generative AI, fueling the increased interest and advancement in this field.
Experts believe that AI holds significant untapped potential, with much yet to be explored. This heightened interest is anticipated to further drive demand as more semiconductor manufacturers explore this field. The AI market is expected to experience substantial growth soon, with a surge in demand for AI chipsets already underway.
According to the World Semiconductor Trade Statistics (WSTS), the semiconductor industry is projected to grow by 16% this year, an increase from the earlier forecast of 13.1%.
Global semiconductor sales are projected to reach $611.2 billion this year, with the Americas expected to lead with projected growth of over 25%. Looking ahead to 2025, WSTS predicts a 12.5% increase in global sales, reaching $687.4 billion.
Semiconductor Funds to Benefit
We have, thus, selected three mutual funds with significant exposure to semiconductor producers carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three- and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Janus Henderson Global Technology and Innovation Fund aims for long-term growth of capital and specializes in technology. JNGTX invests the majority of its net assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology.
Janus Henderson Global Technology and Innovation Fund has a track of positive total returns for over 10 years. Specifically, JNGTX’s returns over the three and five-year benchmarks are 6.7% and 18.8%, respectively. The annual expense ratio of 0.78% is lower than the category average of 0.99%. JNGTX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Red Oak Technology Select fund seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations, or which may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX primarily invests in technology companies that develop, produce, or distribute products or services related to computers, semiconductors and electronics.
Specifically, Red Oak Technology Select fund’s returns over the three and five-year benchmarks are 9.4% and 15.6%, respectively. The annual expense ratio of 0.91% is lower than the category average of 1.24%. ROGSX carries a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Semiconductors Portfolio fund seeks capital appreciation. FSELX normally invests at least 80% of assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Select Semiconductors Portfolio fund has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 28.3% and 35.3%, respectively. The annual expense ratio of 0.67% is lower than the category average of 1.24%. FSELX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
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Semiconductor Sales Rebounding on Growing Demand: 3 Funds to Buy
Semiconductor sales are increasing steadily as price pressures are subsiding and demand is showing a recovery. Also, continued enthusiasm surrounding artificial intelligence (AI), particularly generative AI, has been driving up sales.
The semiconductor industry suffered in 2023 but has been trying to rebound and is projected to grow at a robust pace this year. Investing in semiconductor funds like Janus Henderson Global Technology and Innovation Fund (JNGTX - Free Report) , Red Oak Technology Select (ROGSX - Free Report) and Fidelity Select Semiconductors Portfolio (FSELX - Free Report) thus appears to be a prudent choice.
Semiconductor Sales Rebounding
Global semiconductor sales reached $51.3 billion in July, up 18.7% from the year-ago levels of $43.2 billion, the Semiconductor Industry Association (SIA) said on Tuesday. Compared to the previous month’s total of $50 billion, sales rose by 2.7% in July.
John Neuffer, SIA president and CEO, said “The global semiconductor market continued to grow substantially on a year-to-year basis in July, and month-to-month sales increased for the fourth consecutive month.”
Easing inflation is helping boost semiconductor sales, with reduced price pressures leading to a rebound in demand. Inflation declined sharply in the second quarter after rising in the first quarter when semiconductor sales slowed.
The Federal Reserve believes that inflation is now on track to reach its 2% target. The Federal Reserve is preparing to initiate its easing cycle after increasing interest rates to a 23-year high.
Market participants are predicting a 25-basis point reduction this month. Lower interest rates generally benefit growth assets by decreasing the opportunity cost of holding non-yielding assets, such as technology and semiconductor stocks.
AI Enthusiasm Boosting Semiconductor Demand
This year’s tech has been largely influenced by NVIDIA Corporation. As a leading player in the semiconductor industry, NVIDIA has been at the forefront of generative AI, fueling the increased interest and advancement in this field.
Experts believe that AI holds significant untapped potential, with much yet to be explored. This heightened interest is anticipated to further drive demand as more semiconductor manufacturers explore this field. The AI market is expected to experience substantial growth soon, with a surge in demand for AI chipsets already underway.
According to the World Semiconductor Trade Statistics (WSTS), the semiconductor industry is projected to grow by 16% this year, an increase from the earlier forecast of 13.1%.
Global semiconductor sales are projected to reach $611.2 billion this year, with the Americas expected to lead with projected growth of over 25%. Looking ahead to 2025, WSTS predicts a 12.5% increase in global sales, reaching $687.4 billion.
Semiconductor Funds to Benefit
We have, thus, selected three mutual funds with significant exposure to semiconductor producers carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three- and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Janus Henderson Global Technology and Innovation Fund aims for long-term growth of capital and specializes in technology. JNGTX invests the majority of its net assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology.
Janus Henderson Global Technology and Innovation Fund has a track of positive total returns for over 10 years. Specifically, JNGTX’s returns over the three and five-year benchmarks are 6.7% and 18.8%, respectively. The annual expense ratio of 0.78% is lower than the category average of 0.99%. JNGTX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Red Oak Technology Select fund seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations, or which may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX primarily invests in technology companies that develop, produce, or distribute products or services related to computers, semiconductors and electronics.
Specifically, Red Oak Technology Select fund’s returns over the three and five-year benchmarks are 9.4% and 15.6%, respectively. The annual expense ratio of 0.91% is lower than the category average of 1.24%. ROGSX carries a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Semiconductors Portfolio fund seeks capital appreciation. FSELX normally invests at least 80% of assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Select Semiconductors Portfolio fund has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 28.3% and 35.3%, respectively. The annual expense ratio of 0.67% is lower than the category average of 1.24%. FSELX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>