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Semiconductor ETFs For Intel Earnings

NEW YORK ( TheStreet) -- Intel (INTC - Get Report) will be reporting earnings after the market's close today, and investors can bet on the company and the semiconductor sector with a number of ETFs.

iShares Goldman Sachs Semiconductor Index Fund (IGW) and SPDR S&P Semiconductor ETF (XSD) are the best choices here, while PowerShares Dynamic Semiconductors (PSI) trades with low volume.

Another fund that focuses on the sector, which happens to be the most popularly traded, is Semiconductor HOLDRS ETF (SMH).

In terms of an ETF play that is aimed to reap the benefits of INTC's upcoming earnings, SMH offers the most direct exposure to the company with 22.4% of its net assets devoted to the company.

SMH's relatively large exposure to INTC differentiates the fund from XSD and IGW. Overall, SMH has far fewer holdings, and puts much more weight in its top holdings such as INTC and Texas Instruments (TXN).

For investors seeking heavy exposure to INTC, the best approach is to simply buy the stock. If you want broader exposure, you could pair one of the broader ETFs to create exposure heavily weighted towards Intel.

For more conservative investors looking to hold a fund for the duration of earnings season or looking to benefit from bullishness on the sector as a whole, XSD or IGW are better options. Investors looking for slightly more Intel exposure should choose IGW; INTC is the second largest holding comprising more than 8% of the fund's assets. TXN, which reports next week, is the number one holding with a slightly larger weighting than Intel.

XSD uses an equal weight strategy and has an INTC weighting of roughly 4%. Altera (ALTR) is the top holding with 4.5% of assets, and Advanced Micro Devices (AMD) is the smallest, with 3.6% of assets.

In terms of gauging what sort of effect the earnings from INTC will have, markets have been very calm in anticipation of earnings. Whether positive or negative, the effect on market performance should be fairly large, but the trend suggests reports will be positive. Samsung, another large semiconductor manufacturer, has made bold earnings predictions and recently reported strong earnings.

This also highlights the international ETF option for playing INTC earnings.
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SMH $52.46 0.00%


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