Finance

Play artificial intelligence with semiconductor ETF: VanEck CEO

Published

7 months ago

April 19, 2024

Investing in semiconductors may be the most efficient way to play the artificial intelligence boom, according to VanEck’s CEO.

“Semiconductors have become the heart of the AI trade,” Jan van Eck told CNBC’s “ETF Edge” this week.

His firm’s VanEck Semiconductor ETF (SMH), which tracks 25 of the biggest chipmakers in the country, is up 21% this year as of Wednesday’s close. However, SMH has fallen nearly 6% this month, led to the downside by Intel, AMD and On Semiconductor.

The fund’s top holding, Nvidia, has seen its shares surge nearly 70% this year amid soaring demand for its AI processors, but it’s also down 7% since the start of the month.

Van Eck suggests the weakness is temporary. He contends high interest in AI chips could set up the group for more durable returns.

“They have become revalued from being a highly cyclical business with short product lives to part of the growth trade, and they have more recurring revenue, so they can just stay at high profitabilities even despite some of the short-term stuff,” said van Eck.

ETF Action founding partner Mike Akins also sees opportunities for investors. He thinks limited competition for some of the top chipmakers’ products could sustain the group.

“You have a high moat, and they control that pricing point,” he said in the same interview. “Until there’s a situation where competition increases meaningfully in this space, where you can have some pricing pressure, it’s hard to see that trade going away.”

Still, Akins advises investors to pay attention to semiconductor fund flows as a barometer for future performance.

“We often caution our clients to almost think about flows as a contrarian indicator. As flows get really depressed, that’s potentially opportunity to buy, and vice versa. As flows get really extended, it might be time to pare a little bit.”

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Finance

Protecting your portfolio against risks tied to Trump’s tariff plan

Published

4 hours ago

November 16, 2024

Business Finance News

Biggest Risks After the Rally: Trade & Top Valuations

Money manager John Davi is positioning for challenges tied to President-elect Donald Trump’s tariff agenda.

Davi said he worries the new administration’s policies could be “very inflationary,” so he thinks it is important to choose investments carefully.

“Small-cap industrials make more sense than large-cap industrials,” the Astoria Portfolio Advisors CEO told CNBC’s “ETF Edge” this week.

Davi, who is also the firm’s chief investment officer, expects the red sweep will help push a pro-growth, pro-domestic policy agenda forward that will benefit small caps.

It appears Wall Street agrees so far. Since the presidential election, the Russell 2000 index, which tracks small-cap stocks, is up around 4% as of Friday’s close.

Davi, whose firm has $1.9 billion in assets under management, also likes staying domestic despite the tariff risks.

“We’re overweight the U.S. I think that’s the right playbook in the next few years until the midterms,” added Davi. “We have two years of where he [Trump] can control a lot of the narrative.”

But Davi plans to stay away from fixed income due to challenges tied to the growing budget deficit.

“Be careful if you own bonds for sure,” said Davi.

Since the election, the benchmark 10-year Treasury yield is up 3% as of Friday’s close.