Diversified Stock Portfolio: 5 Sector ETFs and International ETFs to Buy

In this article, we discuss 5 best sector and international ETFs to buy. If you want to read our detailed discussion on the different markets, head over to Diversified Stock Portfolio: 10 Sector ETFs and International ETFs to Buy.

5. Invesco Building & Construction ETF (NYSE:PKB)

5-Year Performance as of September 26: 67.48%

The Invesco Building & Construction ETF (NYSE:PKB) is one of the best ETFs to diversify investors’ stock portfolios. It is based on the Dynamic Building & Construction Intellidex Index. Invesco Building & Construction ETF (NYSE:PKB) normally invests at least 90% of its total assets in the securities that make up the index. This ETF was introduced on October 26, 2005. As of September 26, 2023, it features an expense ratio of 0.57% and holds a portfolio of 31 stocks.

Lennox International Inc. (NYSE:LII) is one of the largest holdings of the Invesco Building & Construction ETF (NYSE:PKB). Lennox International Inc. (NYSE:LII) is involved in creating, producing, and selling a variety of products for the heating, ventilation, air conditioning, and refrigeration markets. Their operations span across the United States, Canada, and worldwide. Lennox International Inc. (NYSE:LII)’s business is divided into three segments – Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration.

According to Insider Monkey’s second quarter database, 31 hedge funds were bullish on Lennox International Inc. (NYSE:LII), same as the previous quarter. Dmitry Balyasny’s Balyasny Asset Management is the largest stakeholder of the company, with 533,892 shares worth $174.1 million.

The London Company Mid Cap Strategy made the following comment about Lennox International Inc. (NYSE:LII) in its second quarter 2023 investor letter:

“Lennox International Inc. (NYSE:LII) – LII outperformed during 02. While residential HVAC volume turned negative, current trends are consistent with expectations. Additionally, the new CEO is executing well against stated objectives, specifically, on restoring profitability of the Commercial segment. We are also supportive of management’s decision to sell the international business, which we viewed as a subscale distraction. We see LII as a high quality business in a good industry with opportunities to improve, and we are pleased to see the company effectively attacking opportunities for improvement.”

4. iShares MSCI India Small-Cap ETF (BATS:SMIN)

5-Year Performance as of September 26: 71.21%

The iShares MSCI India Small-Cap ETF (BATS:SMIN) helps diversify stock portfolios for investors. It aims to reflect the performance of the MSCI India Small Cap Index. This ETF provides investors with exposure to these small Indian public firms, offering a targeted access to small-cap Indian stocks. It was launched on February 8, 2012, and by September 26, 2023, it held a portfolio consisting of 447 stocks. The fund’s total assets amount to $447 million as of September 26, 2023, along with an expense ratio of 0.74%.

Persistent Systems Limited (NSE:PERSISTENT) is one of the top holdings of the iShares MSCI India Small-Cap ETF (BATS:SMIN). Persistent Systems Limited (NSE:PERSISTENT) is a company that offers software products, services, and technology solutions across India, North America, and worldwide. Their clientele spans different sectors including banking, financial services, insurance, healthcare, life sciences, industrial, software and hi-tech, as well as telecom and media. Persistent Systems Limited (NSE:PERSISTENT) was founded in 1990 and is headquartered in Pune, India.

3. First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL)

5-Year Performance as of September 26: 115.82%

The goal of the First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL) is to achieve investment results that align with the price and yield performance of the Nasdaq US Smart Semiconductor Index. This ETF aims to reflect the holdings of the Nasdaq US Smart Semiconductor Index to generate results that are highly correlated with the index. It was introduced on September 20, 2016, and as of September 26, 2023, it manages assets valued at $1.10 billion, featuring a portfolio of 32 stocks. The expense ratio for this ETF stands at 0.60%. The First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL) adds diversity to investors’ stock portfolios.

Broadcom Inc. (NASDAQ:AVGO) is one of the top holdings of the First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL). Broadcom Inc. (NASDAQ:AVGO) is a global company involved in the design, development, and provision of a wide range of semiconductor devices. Their primary focus lies in creating complex digital and mixed-signal devices based on complementary metal oxide semiconductor technology, along with analog III-V based products. The company functions through two segments – Semiconductor Solutions and Infrastructure Software.

According to Insider Monkey’s second quarter database, 72 hedge funds were bullish on Broadcom Inc. (NASDAQ:AVGO), same as the preceding quarter. Rajiv Jain’s GQG Partners is a significant stakeholder of the company, with 1.1 million shares worth $955.7 million.

FPA Crescent Fund made the following comment about Broadcom Inc. (NASDAQ:AVGO) in its Q2 2023 investor letter:

“In contrast to our short-lived ownership of Open Text, Broadcom Inc. (NASDAQ:AVGO) has been a holding for just short of five years. At the time of our original purchase, the company was primarily focused on driving organic growth in its existing semiconductor franchises and acquiring new ones when the opportunity presented itself. As potential acquisition candidates in the industry became scarce, management, led by highly regarded Hock Tan, pivoted to set their sights on the software industry, culminating in several acquisitions. Unlike Open Text, in this instance, after multiple discussions with senior management, we found ourselves comfortable with the company’s new strategy after re-examining the investment implications. We are glad we did, as it would be an understatement to say that Broadcom has gone from strength to strength over the past five years, improving operating margins, aggressively repurchasing shares, and increasing the dividend, all the while continuing to execute its M&A strategy flawlessly.”

2. iShares U.S. Technology ETF (NYSE:IYW)

5-Year Performance as of September 26: 113.13%

The iShares U.S. Technology ETF (NYSE:IYW) aims to replicate the performance of the Russell 1000 Technology RIC 22.5/45 Capped Index, which consists of U.S. technology sector stocks. This ETF provides exposure to American companies involved in electronics, computer software and hardware, and information technology, adding diversity to investors’ stock portfolios. The ETF was launched on May 15, 2000, and by September 26, 2023, it held a portfolio of 135 stocks. Its total assets amount to $10.5 billion as of September 26, 2023, with an expense ratio of 0.40%.

Apple Inc. (NASDAQ:AAPL) is the largest holding of the iShares U.S. Technology ETF (NYSE:IYW). Apple Inc. (NASDAQ:AAPL) is a global company known for creating, producing, and promoting smartphones, personal computers, tablets, wearables, and a range of accessories.

According to Insider Monkey’s second quarter database, 135 hedge funds were bullish on Apple Inc. (NASDAQ:AAPL), compared to 131 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the leading position holder in the company, with 915.56 million shares worth $177.6 billion.

Choice Equities Capital Management made the following comment about Apple Inc. (NASDAQ:AAPL) in its second quarter 2023 investor letter:

“Dramatic valuation differences across market cap sizes continue. This has been the case for some time now. Perhaps I have spent too much time discussing these dichotomies, as generally, I feel like if we pick the right stocks and manage market exposures thoughtfully, our equities- oriented portfolio will prosper across various market cycles. However, when markets become as lopsided as they have lately, I feel additional discussion on the market environment is worthwhile, if only to help highlight the opportunities that are available and the likely path forward. I expect future discussions to soon be focused again on our moderately concentrated portfolio. But for now, let’s take one last in-depth look at how far reaching these valuation dichotomies have again become.(Please note: charts that accompany the following can be found in the Appendix.)

Take Apple Inc. (NASDAQ:AAPL) for example. It is the largest stock by market cap, and fairly considered one of the best companies in the world. The company has been extraordinarily successful and improved standards of living everywhere in the process with their ubiquitous products. Along the way, shareholders have been richly rewarded, with shares increasing nearly fourteen-fold over the last ten years while generating an annualized total shareholder return of 31%, including dividends.

On the back of another big quarter for large cap tech, it is now the first stock to surpass the $3T market cap threshold. This makes its weighting in the ~$37T market cap of the S&P 500, ~8%. It also means this one stock’s market cap is larger than that of the entire ~$2.98T market cap of the Russell 2000 index, the first time in history a single stock has outweighed the Russell 2000 – aside from two brief days in September 2020 when Apple’s market cap then accomplished the same…”

1. SPDR S&P Semiconductor ETF (NYSE:XSD)

5-Year Performance as of September 26: 150.36%

The SPDR S&P Semiconductor ETF (NYSE:XSD) helps diversify investors’ stock portfolios. It aims to reflect the investment performance of the S&P Semiconductor Select Industry Index. It was launched on January 31, 2006, and as of September 26, 2023, it manages assets valued at $1.34 billion, along with a portfolio of 39 stocks. The expense ratio for this ETF stands at 0.35%.

NVIDIA Corporation (NASDAQ:NVDA) is one of the largest holdings of the SPDR S&P Semiconductor ETF (NYSE:XSD). NVIDIA Corporation (NASDAQ:NVDA) offers graphic, computing, and networking solutions in the United States, Taiwan, China, and internationally. Their products serve different sectors, including gaming, professional visualization, data centers, and automotive.

According to Insider Monkey’s second quarter database, 175 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA). The number saw a significant increase from the preceding quarter when 132 funds had invested in the stock. Rajiv Jain’s GQG Partners held a significant position in the company, with 13.94 million shares valued at $5.9 billion.

RiverPark Large Growth Fund made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2023 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were our next top contributor in reaction to blowout 1Q results and 2Q guidance. The company reported revenue of $7.2 billion and EPS of $1.09, 10% and 18% ahead of expectations. Revenue guidance for 2Q of $11 billion was 53% above expectations. The artificial intelligence arms race kicked-off by generative AI applications ChatGPT and Alphabet’s Bard has generated tremendous demand for Nvidia’s next generation graphic processors.

NVDA is the leading designer of graphics processing units (GPU’s) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following 1Q’s strong results, Jensen Huang, founder and CEO of NVIDIA stated in the company’s press release, “[a] trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”

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