5 Best Semiconductor ETFs To Consider in Canada for 2024

In recent years, semiconductors have been one of the hottest sectors to invest in. After all, they are one of the most important components of computer chips.

These chips provide the power behind all of our electronic devices today. They are also a major part of emerging technologies like AI.

Investing in semiconductors has been rewarding for investors. In this article, we will discuss the 5 best semiconductor ETFs in Canada for 2024.

Best Semiconductor ETFs in Canada 2024

1. Horizons Global Semiconductor Index ETF

Here are some key facts about this ETF:

• Ticker Symbol: CHPS.TO
• Inception Date: June 21, 2021
• Assets Under Management: $39 million
• Number of Holdings: 50
• MER: 0.55%
• Distribution Yield: 0.98%
• 1-Year Return: -7.27%

Horizons Global Semiconductor Index ETF is Canada’s first and only ETF dedicated exclusively to semiconductor companies. It was founded in 2021 and has returned -0.89% to shareholders since its inception.

This ETF holds some of the biggest names in the semiconductor space. The top holdings are NVIDIA Corp (NVDA), Broadcom Inc (AVGO), and Taiwan Semiconductor Manufacturing Co Ltd ADR (TSM). It also holds stocks like AMD, ASML, and Texas Instruments in its top ten weighted holdings.

CHPS has a 65.67% allocation to American stocks. The second-highest weighted allocation is a 12.44% allocation to stocks from Taiwan.

2. iShares Semiconductor ETF

Here are some key facts about this ETF:

• Ticker Symbol: NASDAQ: SOXX
• Inception Date: June 10, 2001
• Assets Under Management: $7.15 billion
• Number of Holdings: 30
• MER: 0.35%
• Distribution Yield: 1.01%
• 1-Year Return: -4.67%

The iShares Semiconductor ETF is the most well-known semiconductor ETF on the market. With more than $7.1 billion in assets, it is also one of the largest semiconductor ETFs along with the VanEck Semiconductor ETF (SMH).

This ETF only holds American companies that design, manufacture, and distribute semiconductors. The largest holdings in SOXX are NVIDIA Corp (NVDA), Broadcom Inc (AVGO), and Texas Instrument Inc (TXN).

3. VanEck Semiconductor ETF

Here are some key facts about this ETF:

• Ticker Symbol: NASDAQ: SMH
• Inception Date: December 20, 2011
• Assets Under Management: $7.1 billion
• Number of Holdings: 25
• MER: 0.35%
• Distribution Yield: 0.99%
• 1-Year Return: -1.12%

For those wondering if there is a Vanguard semiconductor ETF, the VanEck Semiconductor ETF might be the closest thing. It is not officially a Vanguard ETF, but it is offered by prospectus only on the Vanguard website.

This is another massive semiconductor ETF with over $7 billion in net assets. It has an identical MER to SOXX  but has a slightly slimmer portfolio of holdings.

The largest weighted stocks in SMH are NVIDIA Corp (NVDA), Taiwan Semiconductor Manufacturing Co Ltd ADR (TSM), and ASML Holding Nv (ASML).

4. SPDR S&P Semiconductor ETF

 Here are some key facts about this ETF:

• Ticker Symbol: NYSEARCA: XSD
• Inception Date: January 31, 2006
• Assets Under Management: $1.38 billion
• Number of Holdings: 38
• MER: 0.35%
• Distribution Yield: 0.39%
• 1-Year Return: 1.08%

The SPDR S&P Semiconductor ETF seeks to track the S&P Semiconductor Select Industry Index. This fund holds 38 US-listed semiconductor stocks with an identical MER to both SOXX and SMH.

XSD’s largest weighted holdings are NVIDIA Corp (NVDA), Rambus Inc (RMBS), and Micron Technology Inc (MU). The fund also has significant positions in well-known companies like Intel Corporation (INTC), AMD (AMD), and Broadcom Inc (AVGO).

5. ProShares Ultra Semiconductors

 Here are some key facts about this ETF:

• Ticker Symbol: NYSEARCA: USD
• Inception Date: January 30, 2007
• Assets Under Management: $213 million
• Number of Holdings: 33
• MER: 0.97%
• Distribution Yield: 0.17%
• 1-Year Return: -27.21%

Now for the riskiest semiconductor ETF on our list: the ProShares Ultra Semiconductors ETF. This fund is a 2X leveraged ETF and uses financial derivatives to amplify gains and losses.

Leveraged ETFs are typically more actively managed which explains the higher expense ratio than the other ETFs.

This ETF holds 33 different semiconductor companies. The largest allocation is 29.63% to NVIDIA Corp (NVDA). The next two highest allocations are Broadcom Inc (AVGO) and Texas Instruments Inc (TXN).

How To Buy Semiconductor ETFs in Canada in 2024

All of these semiconductor ETFs are available at any brokerage in Canada. If you are looking to be savvy with your investments, you can buy these ETFs at a discount brokerage like Wealthsimple or Questrade to save on your trading fees.

Benefits and Downsides of Semiconductor ETFs

Semiconductors are a high-growth, cyclical industry. This means you usually have to keep up to date with the latest technologies from each company, some of which are difficult to understand.

It also means that when semiconductor stocks are seeing high sales, the stocks and ETFs can yield incredible gains. On the flip side, when the sector sees a decline in demand, investment losses can pile up.

One downside to investing in semiconductor ETFs is that most of them hold the same stocks. For example, all five of the ETFs listed in this article have NVIDIA as their highest allocation.

Semiconductor ETFs tend to have higher MERs and lower distribution yields. Tech stocks typically do not pay high dividends. As well, semiconductor ETFs often hold foreign companies, which can account for a higher MER.

Best Semiconductor Stocks

• NVIDIA Corp (NASDAQ: NVDA)
• Advanced Micro Devices Inc (NASDAQ: AMD)
• Intel Corporation (NASDAQ: INTC)
• Broadcom Inc (NASDAQ: AVGO)
• Texas Instruments Inc (NASDAQ: TXN)
• Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE: TSM)
• Marvell Technology Inc (NASDAQ: MRVL)
• Qualcomm Incorporated (NASDAQ: QCOM)

Are Semiconductor ETFs a Good Investment?

Cyclical sectors like semiconductors can be great investments when there is high demand, and losing investments when that demand falls.

The nice thing about a semiconductor ETF is that you get a broad sector performance, not just the ups and downs of individual stocks.

With technology advancing at a meteoric rate, semiconductors will be necessary components for the long-term future.

Even though consumer demand fluctuates, semiconductors are the building blocks for every type of technology in the world.

Methodology for Choosing Semiconductor ETFs

Since many of the holdings will be similar across semiconductor ETFs, how can you make sure you choose the best semiconductor ETF?

Looking for a more equally weighted allocation ensures that one stock does not have an overpowering impact on the performance of the fund.

It also pays to seek out lower MERs so that you can keep more of your gains over the long term.

FAQs

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