Invesco Semiconductors ETF: A Smart Beta Fund for Diversified Exposure to the Technology Sector
The Invesco Semiconductors ETF, ticker symbol PSI, is a smart beta exchange-traded fund designed to provide broad exposure to the Technology sector. Launched on June 23, 2005, this fund offers a unique investment strategy that seeks to outperform traditional market-cap weighted indexes.
What Are Smart Beta ETFs?
For years, the ETF industry has been dominated by products based on market capitalization-weighted indexes. These funds are designed to represent the broader market or a specific market segment and offer a low-cost, convenient, and transparent way of replicating market returns. However, for investors who prefer to try and beat the market through selective stock picking, smart beta funds provide an attractive alternative.
Smart beta ETFs track non-cap weighted strategies that attempt to select stocks with better risk-return profiles based on fundamental characteristics or a combination of such characteristics. These indexes can be more complex than traditional market-cap weighted indexes, but they offer a range of benefits for investors who want to add diversification and potentially improve returns to their portfolios.
The Fund Sponsor & Index
Invesco is the sponsor of the PSI fund, which seeks to match the performance of the Dynamic Semiconductor Intellidex Index before fees and expenses. The index is designed to provide capital appreciation by evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness, and risk factors.
The Dynamic Semiconductor Intellidex Index is comprised of stocks from semiconductor companies, which are selected using a proprietary methodology that evaluates the performance potential of individual securities. The index has been designed to provide diversified exposure to the Technology sector, with a focus on capital appreciation through thorough evaluation of companies based on multiple criteria.
Cost & Other Expenses
When selecting an ETF, cost is an essential consideration. Cheaper funds can significantly outperform their more expensive peers if all other fundamentals are equal. The annual operating expenses for the PSI fund are 0.56%, which makes it comparable to most peer products in the space.
The 12-month trailing dividend yield for this ETF is 0.17%. This indicates that investors should not expect significant dividend income from this fund, but rather focus on capital appreciation through diversified exposure to the Technology sector.
Sector Exposure and Top Holdings
ETFs offer a convenient way to gain diversified exposure to specific sectors or market segments. The PSI fund has a heavy allocation to the Information Technology sector, representing 100% of its portfolio. This means that investors can benefit from broad exposure to the Technology sector without needing to purchase individual stocks.
The top holdings in this fund include Broadcom Inc (AVGO), Kla Corp (KLAC), and Applied Materials Inc (AMAT). These companies are major players in the semiconductor industry, which makes them attractive holdings for a fund focused on diversified exposure to the Technology sector. The top 10 holdings account for approximately 48.29% of the PSI fund’s total assets under management.
Performance and Risk
Year-to-date, the Invesco Semiconductors ETF has lost about -8.35%, while it is down around -9.64% over the last 12 months (as of June 4, 2025). The fund has traded between $39.29 and $66.72 in this past 52-week period.
The beta of the PSI fund is 1.48, indicating that it is a high-risk choice in the space. This means that investors should be prepared for significant price swings when investing in this fund. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Investors seeking to outperform the Technology ETFs segment of the market can consider other funds in the space. The iShares Semiconductor ETF (SOXX) tracks the PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH) tracks the MVIS US Listed Semiconductor 25 Index.
These two funds have significantly more assets under management, with SOXX having $12.02 billion and SMH having $22.97 billion. However, they also come with higher expense ratios of 0.35% each.
Bottom Line
The Invesco Semiconductors ETF offers a unique investment strategy that seeks to outperform traditional market-cap weighted indexes through diversified exposure to the Technology sector. With a focus on capital appreciation and a range of benefits for investors, this fund provides an attractive option for those looking to add diversification and potentially improve returns to their portfolios.
Investors can learn more about this product and other ETFs by screening for products that match their investment objectives and reading articles on latest developments in the ETF investing universe.