TSM - High Risk-Reward: Deep-Dive Analysis Into The Volatile VanEck Semiconductor ETF
2024-03-16 10:18:58 ET
Summary
- VanEck Semiconductor ETF has generated truly outstanding returns for shareholders over the last five years.
- The fund's concentration in the semiconductor industry makes it a high-risk and volatile security, potentially unsuitable for most ETF investors.
- The fund's objective and asset selection process are well-defined, but its narrow focus limits the fund to investors purely seeking semiconductor industry exposure.
- VanEck's expertise in niche ETFs is combined with a great management team that instills confidence in the fund's operations.
- Hold rating issued due to real risk and downside potential.
Investment Thesis
The VanEck Semiconductor ETF ( SMH ) has performed remarkably over the last five years. The fund’s low expense ratio and fees combined with close replication of what has been a massively lucrative industry has generated superb returns for shareholders.
However, an increasingly bearish macro combined with what I believe is a potential overvaluation with regards to the holdings present within the SMH ETF suggests outsized returns in the coming years may be difficult to find.
The limited diversification present in holdings suggests the fund is high-risk in nature and subject to significant volatility making it unsuitable in my opinion for most ETF investors....
High Risk-Reward: Deep-Dive Analysis Into The Volatile VanEck Semiconductor ETF