A New Wave Of CAPEX Spending On IT Could Provide A Major Boost To These Semiconductor ETFs

“Semiconductor sales fell more than 9% throughout 2009, but analysts are now predicting a wave of nearly 20% growth in sales for the sector in 2010. Consumers are parting with their hard-earned dollars in the tech sector. Research firm IDC, reports that shipments of personal computers have risen by 24% in the past quarter. The rise in e-book readers popularity, such as Amazon’s (NASDAQ: AMZN) Kindle, are also having positive effects. Global e-book reader shipments are predicted to increase from 700,000 units in 2008 to more than 28 million units by 2013. Also the push for consumers to be more “green” could help the semi industry profit. As consumers buy more energy efficient appliances, the more complex the chip sets need to be in performing their functions,” Aaron Levitt Reports From Investopedia.
 
Levitt goes on to say, “The average age of a computer in corporate America is nearly five years old. While companies reduced IT spending during the downturn, these older machines are at the point where it becomes more costly to keep them running rather than buy new. Tech companies are typically one of the first recipients of increased corporate spending as their products or services help increase efficiency and growth. Analysts predict that CAPEX spending will rise by over 14% in the coming year.”

“The iShares S&P North American Tech-Semiconductors (NYSE: IGW) is the second largest ETF in the sector based on assets, and holds 52 stocks. This includes an 8.5% weighting towards Intel. The equal-weighted SPDR S&P Semiconductor (NYSE: XSD) might be a better choice for investors with its lower expense ratio and more concentrated 27 stock portfolio. The SPDR’s portfolio has outperformed IGW over the last year ending in March, by nearly 16%. The SPDR charges 0.35% in expenses. The most heavily traded choice in the sector is the Semiconductor HOLDRs (NYSE: SMH). The Holding Company Depositary Receipts is made up of a basket of stocks that never get rebalanced or reconstituted. The current mix contains 18 stocks, including Analog Devices (NYSE: ADI) and Applied Materials (NASDAQ: AMAT). The HOLDRs’ interesting structure could be a boon or bust depending on the sector it tracks – just ask investors in the B2B Internet HOLDRs (NYSE: BHH). SMH trades in units of 100 and can be unbundled into the individual stocks. Investors get to keep the voting and dividend rights of the underlying stocks,” Levitt Reports.

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Here are some more details on the ETFs mentioned above:

S&P North American Technology-Semiconductors Index Fund (NYSE:IGW) 

The iShares S&P North American Technology-Semiconductors Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S.-traded semiconductor stocks as represented by the S&P North American Technology-Semiconductors Index™.

Top Daily Holdings*
as of 4/21/2010
 
INTEL CORP 8.48%
APPLIED MATERIALS INC 8.18%
TEXAS INSTRUMENTS INC 7.13%
BROADCOM CORP-CL A 6.96%
NVIDIA CORP 4.22%
MICRON TECHNOLOGY INC 4.18%
ANALOG DEVICES 4.13%
CREE INC 3.71%
ALTERA CORPORATION 3.56%
XILINX INC 3.45%
Total 53.99%
*Holdings are subject to change.

Chart foriShares S&P North Amer Tech-Semicondctrs (IGW)

SPDR S&P Semiconductor ETF (NYSE: XSD)

The SPDR® S&P® Semiconductor ETF, before expenses, seeks to closely match the returns and characteristics of the S&P Semiconductor Select IndustryTM Index (ticker: SPSISCTR). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.

Fund Top Holdings
As of04/20/2010
Name Weight Total Mkt Cap M Shares Held
Cree Inc 4.25% $ 8,724.07 93,760
Lsi Corporation 4.24% $ 4,239.24 1,194,031
Atheros Communications Inc 4.24% $ 3,008.17 178,702
Linear Technology Corp 4.17% $ 7,011.54 241,089
Intel Corp 4.16% $ 133,536.39 312,689
Atmel Corp 4.11% $ 2,650.26 1,293,967
International Rectifier Cor 4.10% $ 1,749.11 302,144
Intersil Corp 4.09% $ 2,059.46 443,073
Texas Instrs Inc 4.07% $ 33,098.02 277,107
Silicon Laboratories Inc 4.03% $ 2,338.55 143,856

Chart forSPDR S&P Semiconductor (XSD)

Semiconductor HOLDRs (NYSE: SMH)

The investment to diversify your investment in the semiconductor industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities. The trust holds shares of common stock issued by specified companies that, when initially selected, were involved in the semiconductor business. Except when a reconstitution event, distribution of securities by an underlying issuer or other event occurs, the group of companies will not change. There are currently 20 companies included in the Semiconductor HOLDRS.

TOP 10 HOLDINGS ( 87.07% OF TOTAL ASSETS)  
 
Company Symbol % Assets
Intel Corporation (INTC) 23.90
Texas Instruments Incorporated (TXN) 19.35
Applied Materials, Inc. (AMAT) 12.45
Analog Devices, Inc. Common Sto (ADI) 6.15
Altera Corporation (ALTR) 5.26
Linear Technology Corporation (LLTC) 5.09
Xilinx, Inc. (XLNX) 4.59
Broadcom Corporation (BRCM) 3.56
Micron Technology, Inc. (MU) 3.38
KLA-Tencor Corporation (KLAC) 3.34

Chart forSemiconductor HOLDRs (SMH)

B2B Internet HOLDRs (NYSE: BHH)

The investment seeks to diversify your investment in the B2B segment of the Internet industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities. The trust holds shares of common stock issued by specified companies that, when initially selected, were involved in the B2B segment of the Internet industry. Except when a reconstitution event, distribution of securities by an underlying issuer or other event occurs, the group of companies will not change. There are currently 9 companies included in the B2B Internet HOLDRS.

TOP 10 HOLDINGS ( 100.00% OF TOTAL ASSETS)  
 
Company Symbol % Assets
Ariba, Inc. (ARBA) 85.00
Internet Capital Group, Inc. (ICGE) 15.00

Chart forB2B Internet HOLDRs (BHH)

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