Semiconductor sales are growing at a solid pace as price pressures continue to ease and demand continues to rebound. Global semiconductor sales totaled $50 billion in June, jumping 1.7% from May’s total of $49.1 billion, the Semiconductor Industry Association (SIA) said earlier this week.
The report also highlighted that sales for the second quarter amounted to $149.9 billion, reflecting an 18.3% year-over-year increase and a 6.5% jump from the first quarter.
Regionally, year-over-year semiconductor sales surged 42.8% in the Americas, 21.6% in China, and 12.7% in the Asia Pacific and other regions.
The growing enthusiasm for artificial intelligence (AI) has been driving demand for semiconductors, thereby boosting sales. Several companies are heavily investing in AI systems as part of their digital transformation strategies.
Additionally, generative AI has become a primary focus for several tech giants, leading to increased investment in its development and a significant demand for generative AI chipsets.
According to the World Semiconductor Trade Statistics (WSTS), the semiconductor industry is expected to grow by 16% this year, up from a previous forecast of 13.1%.
Global semiconductor sales are projected to reach $611.2 billion this year. Sales in the Americas are expected to lead with an estimated increase of over 25%. Looking ahead to 2025, WSTS expects global sales to grow by 12.5% to $687.4 billion.
3 Best Choices
We have, thus, selected three mutual funds with significant exposure to semiconductor producers carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three- and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
DWS Science and Technology A KTCAX fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of net assets in common stocks of U.S. companies in the technology sector.
DWS Science and Technology A fund has a track of positive total returns for over 10 years. Specifically, KTCAX’s returns over the three and five-year benchmarks are 10.7% and 21.1%, respectively. The annual expense ratio of 0.87% is lower than the category average of 1.02%. DWS Science and Technology A fund has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Janus Henderson Global Technology and Innovation Fund JNGTX aims for long-term growth of capital and specializes in technology. JNGTX invests the majority of its net assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology.
Janus Henderson Global Technology and Innovation Fund has a track of positive total returns for over 10 years. Specifically, JNGTX’s returns over the three and five-year benchmarks are 8.4% and 20.1%, respectively. The annual expense ratio of 0.78% is lower than the category average of 0.99%. JNGTX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Fidelity Advisor Semiconductors Fund Class I FELIX fund seeks capital appreciation. FELIX invests primarily in common stocks. Fidelity Advisor Semiconductors Fund Class I normally invests at least 80% of its assets in securities of companies principally engaged in the design, manufacture, or sale of electronic components; equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Advisor Semiconductors Fund Class I fund has a track of positive total returns for over 10 years. Specifically, FELIX’s returns over the three and five-year benchmarks are 28.8% and 37.7%, respectively. The annual expense ratio of 0.73% is lower than the category average of 1.01%. FELIX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
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