SMH managed to outperform IGW and XSD, but it is still slightly underperforming the S&P 500 with a decline of 1.3% so far in 2010.
Another way to play a rebound in the semiconductor sector is to gain exposure via international ETFs with large sector exposure. There are two country-specific ETFs that spring to mind.
The first is
iShares MSCI Korea Index Fund
. The fund's top holding is Samsung, which accounts for a hefty 18.1% of holdings.
In its last earnings report, Samsung noted that its chip business was a significant source of revenue growth for the company. More recently, the company announced that it would be investing $3.6 billion in a chip production plant in Austin, Texas, in a bullish gesture that future chip demand will stay strong.
Another international play on semiconductors is
iShares MSCI Taiwan Index Fund
This fund's top holding, accounting for 13.8% of assets, is
Taiwan Semiconductor Manufacturing
(TSM - Get Report)
In addition to TSM, the fund has several other tech-related companies outside of the specific semiconductor sector and information technology accounts for 60.8% of the assets in this ETF.
In sum, the best way to play a rally in the semiconductor sector, with a domestic slant, is by using XSD or IGW. For an international play on the rally, EWT or EWY are the best choices.
-- Written by Don Dion in Williamstown, Mass.