The tech sector has recently blown up and is now causing a chain reaction in the semiconductor industry. The industry has seen an influx of investor money moved into heavyweights like Qualcomm and Intel, but a new trend is catching some attention. Equal weight semiconductor funds are a new type of choice of fund and can be a great way to boost returns.
The equal weight semi fund has risen in popularity in the last several months. It’s a relatively new fund that invests primarily in semiconductor companies. The index is organized so that each component stock is given an equal weight in the portfolio. In other words, all semiconductor firms receive an equal amount of investment, no matter the market capitalization.
This can be a great way to offer diversification to a portfolio. Because the entire index is equally weighted, it’s difficult for a single stock to dominate the fund. This type of fund is also actively managed, meaning it can capitalize on any shifts that may occur in the tech sector.
An example of a fund that invests in the equal weight semiconductor industry is the Industrial Select Sector SPDR Fund (NYSEARCA: SOXX). This fund holds a portfolio of semiconductor-related stocks and tracks the performance of the Dow Jones U.S. Semiconductor & Devices Index. This index has been on the rise since the start of 2021 and could be a great way to get into the semiconductor sector.
Overall, the equal weight semi fund can be a great way for investors to diversify their portfolios across the entire semiconductor sector. These funds are an increasingly popular way to invest as they can provide diversity and upside potential over the long term. If the tech sector continues exploding, the SOXX fund could be an interesting consideration with its focus on equal weighting each stock.