Semiconductor ETFs dipped over the summer as investors turned to other industries, but many of these funds are once again rising toward the end of the year.Leveraged semiconductor firms offer investors a chance to make a concentrated bullish or bearish bet on the market over a short period.
SMH has outperformed all other non-leveraged semiconductor ETFs year-to-date, with a total return of nearly 42% in that time and a one-year increase of more than 68%. In the competitive ETF space, where fees for funds are often driven lower, SMH has a moderate expense ratio of 0.35%. This is in line with several other ETFs with a similar focus. VanEck's semiconductor fund also has a healthy asset base of more than $24 billion and strong liquidity based on average trading volumes.
Given its smaller assets under management and lower liquidity levels than better-known rivals, a buy-and-hold strategy may also be best for SOXQ.Although its portfolio remains relatively small, at about 30 holdings, and major players like NVIDIA still dominate, SEMI is nonetheless one of the most diverse semiconductor funds available.
This daily reset means traders must be cautious of volatility over multiple days, as the compounding effect can significantly impact overall returns. For this reason, SOXL is generally best suited for short-term trades rather than long-term holds, allowing investors to take advantage of sharp price movements in semiconductor stocks without holding the risks of daily compounding over an extended period.Some investors shifted away from semiconductors ahead of the Fed's September rate cut.
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