Semiconductor Industry ETF

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DEFINITION

A sector-following fund that invests in developers, manufacturers and marketers of digital and analog chips, so as to obtain investment results that closely match those of an underlying semiconductor index. There are a number of semiconductor ETFs trading on U.S. exchanges that are based on various chip indexes.

INVESTOPEDIA EXPLAINS

The semiconductor industry is widely regarded as a leading indicator of U.S. economic activity. As a result, semiconductor indexes and the ETFs based on them tend to precede advances and declines in broad equity indexes.


By owning an ETF you get the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs you have to pay the same commission to your broker that you'd pay on any regular order.




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