Source: Zhitong Finance
According to statistics, since the beginning of this year, semiconductor ETFs have had about $6.8 billion in capital inflows, more than $5.2 billion in 2021 and $2.1 billion in 2020.
Investors are flocking to semiconductor ETFs, betting that the industry will bounce back from supply chain hurdles and chip shortages that have dragged stock prices lower.
Semiconductor ETFs have seen about $6.8 billion in inflows since the start of the year, more than $5.2 billion for all of 2021 and $2.1 billion for all of 2020, according to data compiled by Bloomberg.
This shows investors’ confidence that the industry will recover from the supply chain disruption caused by the outbreak. But repeated outbreaks could exacerbate the problem, with the iShares Philadelphia Exchange Semiconductor ETF down 21% this year, more than triple the decline in the S&P 500.
The Philadelphia Semiconductor (yellow) and S&P 500 (black) indices rose and fell (source: Bloomberg)
Ross Mayfield, investment strategy analyst at investment bank Baird, said: “It makes sense for the index to underperform given the recent macro environment. But people believe in the long-term growth story, especially with supply chain shortages this year, these ETFs have become people The focus of attention.”
Fund inflow trend of VanEck Semiconductor Index
While the two largest funds by asset size, the iShares Philadelphia Exchange Semiconductor ETF (SOXX.US) and the VanEck Semiconductor Index ETF (SMH.US), are both down more than 20% so far this year; Inflows of $137 million and $2.5 billion were recorded.
Demand for semiconductors remains high, and sales in the semiconductor industry have grown by more than 20% each month for nearly a year. The slide in the stock market has also made valuations more attractive, said Kevin Kelly, CEO of the Kelly ETF.
Kelly pointed out: “Because semiconductors are a collection of demand drivers for multiple themes, such as electric vehicles, the metaverse, and cryptocurrencies, the space is a long-term holding target for investors. If there is a cyclical industry that can bring new capital to work , then in today’s market, semiconductors seem to be an interesting industry to configure.”
While the market remains confident in the semiconductor industry, Instinet’s trading desk strategist Frank Cappelleri said the two largest semiconductor ETFs may not see a turnaround anytime soon.
“Typically, an inflection point doesn’t happen until sentiment turns sour,” Cappelleri said. “That may not necessarily happen now, though continued weakness from now on could eventually change the traffic numbers.”
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