ETF Investors Bet Against Sizzling Chip Stock Rally

ETF Investors Bet Against Sizzling Chip Stock Rally

They’ve plowed around $1.6 billion into SOXS, while pulling $1.7 billion out of SOXL.

sumit
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Senior ETF Analyst
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Reviewed by: Lisa Barr
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Edited by: Daria Solovieva

Nvidia, Broadcom and other chip companies may be among the hottest stocks in the market today, but ETF investors haven’t been very interested in the rally. In fact, some are betting against the industry.  

Since the start of the year, a net $1.2 billion has flowed into semiconductor ETFs, but $1.6 billion of that has gone into the Direxion Daily Semiconductor Bear 3X Shares (SOXS). As a leveraged, inverse fund, SOXS rises when semiconductor stocks go down, and vice versa. 

As such, it’s had a horrendous year, losing three-quarters of its value.  

By contrast, the Direxion Daily Semiconductor Bull 3X Shares (SOXL), which provides geared, long exposure to semis, is up by 166%, yet investors have pulled $1.7 billion out of the fund. While it’s interesting to see investors in these ETFs take a contrarian view on chip stocks, it’s not the only thing going on.  

Sizzling Rally in Chip Stocks

No doubt, there are investors out there who bought these ETFs this year expecting chip stocks to fall back to Earth after their sizzling rally—and they’ve been wrong. 

But many others purchased them before this year’s rally. SOXL, for instance, had $6.2 billion of inflows last year. It makes sense that some of those investors would take profits after the price of the fund rose more than two and a half times this year.   

Meanwhile, other investors may have purchased these ETFs to hedge existing positions. If someone is overweight Nvidia, they might use SOXS as a counterbalance to that stock.  

So, there are myriad reasons people use these funds, and surface-level flows don’t always tell the full story.  

Outside of SOXS and SOXL, chip stock ETF flows have been relatively neutral. Around $907 million has flowed into the First Trust Nasdaq Semiconductor ETF (FTXL) and $368 million has flowed into the SPDR S&P Semiconductor ETF (XSD).  

On the other hand, investors pulled $164 million and $23 million out of the iShares Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF (SMH), respectively.  

 

TickerFund NameFlows ($M)
SOXSDirexion Daily Semiconductor Bear 3X Shares1583
FTXLFirst Trust Nasdaq Semiconductor ETF906.9
XSDSPDR S&P Semiconductor ETF368.1
NVDSAXS 1.25X NVDA Bear Daily ETF163.1
NVDLGraniteShares 1.5x Long NVDA Daily ETF57.3
SOXQInvesco PHLX Semiconductor ETF37.34
PSIInvesco Dynamic Semiconductors ETF21.64
NVDYYieldMax NVDA Option Income Strategy ETF11.15
SHOCStrive U.S. Semiconductor ETF9.47
SSGProShares UltraShort Semiconductors3.68
USDProShares Ultra Semiconductors-13.83
SMHVanEck Semiconductor ETF-22.73
SOXXiShares Semiconductor ETF-164.17
SOXLDirexion Daily Semiconductor Bull 3X Shares-1727.56

 

Contact Sumit Roy at [email protected] 

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.