As you have probably inferred, the SSDD tracks the performance of the ISE Solid State Drive Index, which was designed to track stocks in the growing market for solid-state derives.
Unfortunately, the components of said index indicate that the SSDD and its double-leveraged brother, the SSDL, are mere marketing gimmicks designed to take advantage of a hot buzzword.
Solid-state drives, which use flash memory to store data, are poised to play a big role in the future of mobile computing, since they offer a unique combination of high performance, tough durability, light weight, and low power consumption.
The following is a list of the components of the ISE Solid State Drive Index, along with their weighting:
Fusion-io, Inc (NYSE:FIO) - 16.2%
Western Digital Corp. (NYSE:WDC) - 13.1%
Seagate Technology (NASDAQ:STX) - 12.2%
OCZ Technology (NASDAQ:OCZ) - 10.7%
Silicon Motion Technology (NASDAQ:SIMO) - 8.6%
Marvell Technology Group (NASDAQ:MRVL) - 7.9%
LSI Corporation (NASDAQ:LSI-OLD) - 7.8%
Sandisk (SNDK) - 7.1%
Spansion (CODE) - 6.1%
Micron Technology (NASDAQ:MU) - 6%
STEC (NASDAQ:STEC) - 4.3%
Immediately, you should notice one thing - there are two hard-drive companies here, accounting for 25% of the entire index!
Yes, it's true that both Seagate and Western Digital make solid-state drives, but they make the majority of their money selling old-school hard drives. In fact, their core businesses are being threatened by the emergence of the flash-based solid-state drive.
Looking elsewhere in the list, there are other names that have little to do with the current solid-state drive market. Marvell is much, much more dependent upon hard drives than solid-state drives, and Micron (MU) is mostly a DRAM company.
Even Sandisk, the market leader in flash-memory products, gets minimal revenue from solid-state drives.
Some of the companies here will benefit from the emergence of the solid-state drive market, but it's more than obvious that these ETNs are not the way to play it.
At best, it's a general computing and semiconductor index, and at worst, a marketing gimmick. If you'd like to play storage, I'd recommend going with Sandisk, which is seeing enormous momentum from the booming tablet and smartphone markets.
Disclosure: I am long AAPL, SNDK.