the Nasdaq Composite Index It has a long-term track record. For example, over the past decade, the index has increased in value by 566%. This return has outperformed Standard & Poor’s 500An increase of 401% in the same period.
The Nasdaq’s long-term performance looks amazing until you compare it to one of my favorite ETFs. Over the past decade, this fund has risen by about 1,700%—nearly three times the Nasdaq’s return.
The best news is that it’s still a good time to start.
This is one of the best ETFs ever.
Perhaps the best performing ETF of the past decade is the Van Eck Semiconductor ETF (NASDAQ: SMH)It’s not hard to understand why. As the name of the ETF suggests, this investment vehicle is entirely based on SemiconductorsThere are not many stocks that fall into this category, which means that the fund’s investment portfolio is concentrated. For example, more than 70% of the fund’s portfolio is invested in just 10 companies.
Largest ETF Holding — Nvidia — It dominates the portfolio with a weighting of about 20%. This was a smart decision considering that Nvidia’s value has risen significantly in recent years. The rise of artificial intelligence has a lot to do with the company’s success, as demand for semiconductors and other AI components continues to rise.
The rest of the portfolio can’t be considered a laggard, even if it’s not at Nvidia’s level of performance. Taiwan SemiconductorFor example, General Electric Holdings is the second largest publicly traded company, accounting for 13% of the portfolio, and its stock price has risen more than 80% over the past 12 months. BroadcomShares of Saudi Aramco, the third-largest public company, which controls about 8% of the portfolio, saw an 87% increase during the same period.
All of this means that the VanEck Semiconductor ETF is in the right place at the right time. Its portfolio is committed to investing in semiconductor stocks. And these stocks have proven to be some of the best investments in recent memory.
But don’t think it’s over. There are two reasons why new investors should consider this high-performing exchange-traded fund.
There may be more upside.
The many reasons why semiconductor stocks have performed so well in recent years won’t go away anytime soon.
Demand for semiconductors worldwide is growing at more than 15% per year. Many industry forecasts expect this rapid growth rate to continue. For example, Fortune Business Insights expects demand for semiconductors to grow 14.9% per year through 2032. Its research highlights three key growth areas: artificial intelligence, machine learning, and the Internet of Things.
“These technologies help improve the processing time of memory chips to process large amounts of data in a short time,” Fortune magazine asserts. “Moreover, the potential increasing demand for faster and more advanced memory chips in data center applications is expected to drive the market growth over the forecast timeline.”
The great thing about this ETF is that if you invest in a fund that has multiple stocks, you don’t have to try to predict a single winner. Historically, chip wars have generated many cycles of winners and losers. Nvidia leads the pack today, but no one can predict what will happen in the future.
With the VanEck Semiconductor ETF, there’s no need to guess. Its portfolio weighs some semiconductor stocks more than others, but overall, holdings are diversified across every major competitor, end-user type, and geography.
Do you believe in the rise of artificial intelligence? These are the stocks you want to bet on, and the VanEck Semiconductor ETF has proven its ability to allocate capital wisely within the sector.
Should you invest $1,000 in VanEck ETF Trust – VanEck Semiconductor ETF now?
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the Motley Fool Stock Advisor The team of analysts has just identified what they believe to be Top 10 Stocks Investors should buy now…and the VanEck Semiconductor ETF Trust wasn’t one of them. The 10 stocks that made the list could deliver massive returns in the years to come.
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Ryan Vanzo The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has Disclosure Policy.
Forget the Nasdaq – Buy This Great ETF Instead Originally posted by The Motley Fool
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