Saxo Bank launches new semiconductor equity theme basket
Multi-asset investment company Saxo Bank has announced the launch of its new semiconductor equity theme basket.
The semiconductors basket consists of 30 stocks with a combined market value of $3 trillion dominated by TSMC, NVIDIA, ASML, Intel, Broadcom, Texas Instruments, and Qualcomm. The median revenue growth rate the past year has been 7.6% while earnings have grown almost 20% as prices have increased due to the rising demand and ongoing supply constraints.
Samsung is the largest producer of memory chips, but Saxo has chosen to exclude the company as the main value driver of Samsung is its mobile division. Saxo’s theme baskets aim to provide as much pure exposure to the theme as possible. Sony has been excluded for the same reason as Samsung.
The basket also contains Mediatek and SK Hynix which are based in Taiwan and South Korea respectively and not tradable on the SaxoTrader. Saxo explains that it has selected those two companies because of their size and importance for the industry, and because sometimes tracking the theme better is more important than all companies are tradable on the SaxoTrader.
The basket is up 572% since December 2015 translating into an annualized return of 43% making the semiconductor industry one of best performing industries in the world in recent time. Past performance is of course no indicator of future performance and since Saxo select sstocks for the baskets on market value, there is always a selection and survivorship bias in the past performance measure. Therefore, investors should not look so much at past performance but instead look at present performance, the quality of the company and their outlook but deciding on which stocks to get exposure to.
The key risk to the semiconductor theme basket is lower demand or rising input costs from equipment or commodities.
Last week, Saxo launched its next equity theme basket covering the financial trading industry which has been turbocharged by the pandemic.
In April, Saxo introduced a new theme basket focusing on crypto and blockchain companies. This basket provides inspiration and alternatives for investors that want exposure to cryptocurrencies but do not want to own ETNs or physical cryptocurrencies.