What Are Semiconductor ETFs & How Do They Work?
A semiconductor ETF is an exchange-traded fund that invests in a basket of stocks of companies involved in semiconductor production and distribution. Semiconductor ETFs may be actively-managed or they may seek to passively track the performance of an index of semiconductor stocks.
An ETF, or exchange-traded fund, is an investment security that combines some of the attributes of stocks and mutual funds. Like stocks, ETFs trade intra-day on an exchange. Like passively-managed mutual funds, ETFs often seek to track the performance of a benchmark index, such as the .
Note: There are 10 ETFs on the market specifically focused on semiconductor stocks. Semiconductors include products such as memory chips, integrated circuits, microprocessors, and related equipment. Semiconductors are a major working component of many electronic devices found in multiple industries and technology systems, including automobiles, computers, household products, artificial intelligence, and advanced networking systems.
Prices & Benchmark
Global supply and demand, production fees, and innovation in the industry are some things that may impact semiconductor prices. For example, chip prices rose to record levels in 2021 and 2022, as production costs ramped up to meet demand amidst low post-pandemic supply.
For the 12-months ending January 31, 2022, semiconductor ETFs rose 24.01%, as measured by the ICE Semiconductor Index. By comparison, large-cap US stocks, as measured by the S&P 500 index, returned 23.29% for the same period.
Evaluating Semiconductor ETFs
Our list of top semiconductor ETFs are ranked in order of the trailing 1-year return through January 31, 2022. When researching ETFs, investors are wise to consider long-term performance, as well as expenses, objective, holdings, and applicable ratings.
Criteria investors can use to evaluate the best semiconductor ETFs are:
- Performance: 1-year return is the primary selection criteria for evaluating the performance of our list of semiconductor ETFs. Thus, ETFs with inception dates less than one year ago were ignored. When applicable, investors are wise to do further review of longer periods, such as 3-, 5-, and 10-year returns, before choosing an ETF for their portfolio.
- Expenses: Low expenses, as measured by the fund's expense ratio, can be an important measurement for ETFs. This is because, when ETFs track the same or similar index, the one with the lowest expense ratio will generally outperform those with higher expenses.
- Structure: Most ETFs are open-end funds, as opposed to closed-end funds, or CEFs. An ETF structure can be a grantor trust, a limited partnership, or an ETN. Our list of ETFs does not include ETNs.
- Objective: Only ETFs that primarily hold semiconductor stocks were considered for our list. The search for top semiconductor ETFs was open to actively or passively managed funds. However, alternative objectives and strategies, such as inverse ETFs and leveraged ETFs, were ignored for this list.
- Portfolio holdings: Semiconductor ETFs typically hold stocks of companies that design, manufacture, and distribute semiconductors, also known as semis or chips. Chip stock ETF holdings may also include companies involved in semiconductor equipment.
- Quant Ratings and Factor Grades: Seeking Alpha's Quant Ratings and Factor Grades can be used for evaluating stocks or ETFs. In this article, we share what are called, "Factor Grades," which provide letter grades for five "factors" - Momentum, Expenses, Dividends, Risk, and Asset Flows. To do this, Seeking Alpha compares the relevant metrics for the factor to the same metrics for the other ETFs in its asset class. The factor grades range from a high of A+ to a low of F.
5 Best Semiconductor ETFs by Market Performance
ETF 1-Year Performance iShares Semiconductor ETF 23.42% VanEck Vectors Semiconductor ETF 22.13% Invesco Dynamic Semiconductors ETF 20.58% First Trust Nasdaq Semiconductor ETF 15.79% SPDR S&P Semiconductor ETF 14.12%
1. iShares Semiconductor ETF
iShares Semiconductor ETF (SOXX) is an exchange-traded fund that seeks to track the investment results of an index composed of U.S.-listed equities in the semiconductor sector. SOXX is the largest semiconductor ETF on the market, with $8.6 billion in assets, as of February 7, 2022.
- As of date: January 31, 2022
- 1-year Performance (price): 23.42%
- Expense Ratio: 0.43%, or $43 annually for every $10,000 invested
- 30-Day SEC Yield: 0.69
- Average Daily Volume: 2,353,347
iShares Semiconductor ETF Performance
1-Yr Return 3-Yr Return 5-Yr Return 10-Yr Return iShares Semiconductor ETF 23.41% 42.12% 31.73% 25.63% ICE Semiconductor Index 24.01% 42.89% 32.42% 26.26% S&P 500 Index 23.29% 20.71% 16.78% 15.43%
The iShares Semiconductor ETF performed slightly lower than its index for the 1-year return, which is to be expected for a fund that passively tracks its benchmark. The SOXX ETF edged out the S&P 500 for the 1-year return, but it significantly outperformed the S&P for the 3-, 5- and 10-year returns, through January 31, 2022.
A $10,000 investment in the SOXX ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $12,241
- 3 years ago: $29,291
- 5 years ago: $39,277
- 10 years ago: $84,180
SOXX Structure, Objective, and Holdings
- Inception Date: 07/10/2001
- Issuer: Van Eck Associates Corporation
- Ticker: SOXX
- Primary Exchange: Nasdaq
- Structure: Open End Investment Company
- Objective: Seeks to track the investment results of an index composed of U.S.-listed equities in the semiconductor sector.
SOXX ETF Top 10 Holdings, as of February, 2022
- Broadcom Inc (AVGO)
- Qualcomm Inc (QCOM)
- Nvidia Corp (NVDA)
- Intel Corporation Corp (INTC)
- Advanced Micro Devices Inc (AMD)
- Marvell Technology Inc (MRVL)
- Taiwan Semiconductor Manufacturing (TSM)
- Micron Technology Inc (MU)
- Applied Material Inc (AMAT)
- Kla Corp (KLAC)
iShares Semiconductor ETF Seeking Alpha Quant Ratings
Momentum Expenses Dividends Risk Asset Flows A+ B- A- C- A-
2. VanEck Vectors Semiconductor ETF
VanEck Vectors Semiconductor ETF (SMH) is an exchange-traded fund that seeks to replicate as closely as possible the performance of the MVIS US Listed Semiconductor 25 Index, which is an index of companies involved in semiconductor production and equipment.
- As of date: January 31, 2022
- 1-year Performance (price): 22.13%
- Expense Ratio: 0.35%, or $35 annually for every $10,000 invested
- 30-Day SEC Yield: 0.63
- Average Daily Volume: 5,061,740
VanEck Vectors Semiconductor ETF Performance
1-Yr Return 3-Yr Return 5-Yr Return 10-Yr Return VanEck Vectors Semiconductor ETF 22.13% 43.08% 31.47% 25.14% MVIS US Listed Semiconductor 25 Index 22.39% 43.13% 31.45% 25.10% S&P 500 Index 23.29% 20.71% 16.78% 15.43%
The VanEck Vectors Semiconductor ETF performed slightly lower than its index for the 1-year return, which is to be expected for a fund that passively tracks its benchmark. SMH also performed just below the S&P 500 for the 1-year return, but it significantly outperformed the index in the 3-, 5- and 10-year returns, through January 31, 2022.
A $10,000 investment in the SMH ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $12,213
- 3 years ago: $29,291
- 5 years ago: $39,277
- 10 years ago: $84,180
SMH Structure, Objective, and Holdings
- Inception Date: 12/20/2011
- Issuer: Van Eck Associates Corporation
- Ticker: SMH
- Primary Exchange: Nasdaq
- Structure: Open End Investment Company
- Objective: Seeks to replicate as closely as possible the performance of the MVIS US Listed Semiconductor 25 Index.
SMH ETF Top 10 Holdings, as of January 31, 2022
- Taiwan Semiconductor Manufacturing Co L (TSM)
- Nvidia Corp (NVDA)
- Broadcom Inc (AVGO)
- Qualcomm Inc (QCOM)
- Intel Corp (INTC)
- Texas Instruments Inc (TXN)
- Micron Technology Inc (MU)
- Asml Holding NvAnalog Devices Inc (ASML)
- Analog Devices Inc (ADI)
- Applied Materials Inc (AMAT)
VanEck Vectors Semiconductor ETF Seeking Alpha Quant Ratings
Momentum Expenses Dividends Risk Asset Flows A+ B+ C+ D+ A+
3. Invesco Dynamic Semiconductors ETF
Invesco Dynamic Semiconductors ETF (PSI) is a passively-managed exchange-traded fund that is based on the Dynamic Semiconductor Intellidex Index. The PSI ETF will normally invest at least 90% of its total assets in common stocks that comprise the Index, which normally consists of 30 semiconductor stocks.
- As of date: January 31, 2022
- 1-year Performance (price): 20.58%
- Expense Ratio: 0.56%, or $56 annually for every $10,000 invested
- 30-Day SEC Yield: 0.35
- Average Daily Volume: 85,651
Invesco Dynamic Semiconductors ETF Performance
1-Yr Return 3-Yr Return 5-Yr Return 10-Yr Return Invesco Dynamic Semiconductors ETF 20.58% 38.96% 28.82% 24.72% Dynamic Semiconductor Intellidex Index 21.17% 39.81% 29.63% 25.61% S&P 500 Index 23.29% 20.71% 16.78% 15.43%
The Invesco Dynamic Semiconductors ETF slightly underperformed its index for the 1-year return, which is to be expected for a fund that passively tracks its benchmark. PSI also performed below the S&P 500 for the 1-year return, but it significantly outperformed the S&P 500 in the 3-, 5- and 10-year returns, through January 31, 2022.
A $10,000 investment in GTO, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $12,058
- 3 years ago: $26,833
- 5 years ago: $35,475
- 10 years ago: $91,067
PSI Structure, Objective, and Holdings
- Inception Date: 06/23/2005
- Issuer: Invesco Capital Management LLC
- Ticker: PSI
- Primary Exchange: NYSE Arca
- Structure: Open End Investment Company
- Objective: PSI will normally invest at least 90% of its total assets in common stocks that comprise the Dynamic Intellidex Index, which normally consists of 30 semiconductor stocks to provide capital appreciation.
PSI ETF Top 10 Holdings, as of January 31, 2022
- Broadcom Inc (AVGO)
- Intel Corp (INTC)
- Qualcomm Inc (QCOM)
- Applied Materials Inc (AMAT)
- Texas Instruments Inc (TXN)
- Analog Devices Inc (ADI)
- Advanced Micro Devices, Inc (AMD)
- Nvidia Corp (NVDA)
- Axcelis Technologies Inc (ACLS)
- ON Semiconductor Corporation (ON)
Invesco Dynamic Semiconductors ETF Seeking Alpha Quant Ratings
Momentum Expenses Dividends Risk Asset Flows A C- D+ D+ D+
4. First Trust Nasdaq Semiconductor ETF
First Trust Nasdaq Semiconductor ETF (FTXL) is a passively-managed exchange-traded fund that seeks to replicate the holdings and weightings of the Nasdaq US Smart Semiconductor Index to generate performance results that are 95% correlated to that of the Index, which consists of 30 semiconductor stocks.
- As of date: January 31, 2022
- 1-year Performance (price): 15.79%
- Expense Ratio: 0.60%, or $60 annually for every $10,000 invested
- 30-Day SEC Yield: 0.44
- Average Daily Volume: 17,244
First Trust Nasdaq Semiconductor ETF Performance
1-Yr Return 3-Yr Return 5-Yr Return 10-Yr Return First Trust Nasdaq Semiconductor ETF 15.79% 34.63% 25.04% NA Nasdaq Smart Semiconductor 25 Index 16.77% 35.52% 25.86% NA S&P 500 Index 23.29% 20.71% 16.78% 15.43%
First Trust Nasdaq Semiconductor ETF performs closely below its index, which is to be expected for a passively-managed fund. FTXL performed far below the S&P 500 for the 1-year return, but it significantly outperforms the index in the 3-, 5- and 10-year returns, through January 31, 2022.
A $10,000 investment in GTO, made 1 year, 3 years, and 5 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $11,579
- 3 years ago: $24,402
- 5 years ago: $30,566
FTXL Structure, Objective, and Holdings
- Inception Date: 09/20/2016
- Issuer: First Trust Advisors L.P.
- Ticker: FTXL
- Primary Exchange: Nasdaq
- Structure: Open End Investment Company
- Objective: Seeks to replicate as closely as possible the performance of the MVIS US Listed Semiconductor 25 Index.
FTXL ETF Top 10 Holdings, as of January 31, 2022
- Broadcom Inc (AVGO)
- Qualcomm Inc (QCOM)
- Intel Corp (INTC)
- Texas Instruments Inc (TXN)
- Synaptics Incorporated (SYNA)
- ON Semiconductor Corporation (ON)
- Micron Technology Inc (MU)
- Analog Devices Inc (ADI)
- Advanced Micro Devices, Inc (AMD)
- Nvidia Corp (NVDA)
First Trust Nasdaq Semiconductor ETF Seeking Alpha Quant Ratings
Momentum Expenses Dividends Risk Asset Flows A+ D+ D C- B+
5. SPDR S&P Semiconductor ETF
SPDR S&P Semiconductor ETF (XSD) is an exchange-traded fund that seeks to provide investment results that correspond generally to the total return performance of the S&P Semiconductor Select Industry Index, which normally consists of 40 stocks of companies in the semiconductor industry.
- As of date: January 31, 2022
- 1-year Performance (price): 14.12%
- Expense Ratio: 0.35%, or $35 annually for every $10,000 invested
- 30-Day SEC Yield: 0.16
- Average Daily Volume: 252,282
SPDR S&P Semiconductor ETF Performance
1-Yr Return 3-Yr Return 5-Yr Return 10-Yr Return SPDR S&P Semiconductor ETF 14.12% 42.38% 29.29% 24.14% S&P Semiconductor Select Industry Index 14.46% 42.90% 29.61% 24.47% S&P 500 Index 23.29% 20.71% 16.78% 15.43%
The SPDR S&P Semiconductor ETF performed slightly lower than its index for the 1-year return, which is to be expected for a fund that passively tracks its benchmark. XSD performed far below the S&P 500 for the 1-year return, but it significantly outperformed the index in the 3-, 5- and 10-year returns, through January 31, 2022.
A $10,000 investment in XSD, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $11,412
- 3 years ago: $28,863
- 5 years ago: $36,576
- 10 years ago: $86,920
XSD Structure, Objective, and Holdings
- Inception Date: 12/20/2011
- Issuer: SSGA Funds Management
- Ticker: XSD
- Primary Exchange: NYSE Arca
- Structure: Open End Investment Company
- Objective: Seeks to provide investment results that correspond generally to the total return performance of the S&P Semiconductor Select Industry Index.
XSD ETF Top 10 Holdings, as of January 31, 2022
- Xilinx Inc (XLNX)
- Micron Technology Inc (MU)
- ON Semiconductor Corporation (ON)
- Power Integrations, Inc (POWI)
- Qualcomm Inc (QCOM)
- Intel Corp (INTC)
- Broadcom Inc (AVGO)
- Universal Display Corporation (OLED)
- Advanced Micro Devices (AMD)
- Cirrus Logic Inc (CRUS)
SPDR S&P Semiconductor ETF Seeking Alpha Quant Ratings
Momentum Expenses Dividends Risk Asset Flows A- B+ D D+ B-
Bottom Line
Semiconductor ETFs can provide investors with broad exposure to the semiconductor industry, which includes companies involved in the production and distribution of memory chips, integrated circuits, and microprocessors. Semiconductor stocks have produced above-average returns in recent years but market risk can be higher compared to a broad market index, such as the S&P 500.
Kent Thune
Kent Thune, CFP®, is a fiduciary investment advisor specializing in tactical asset allocation and portfolio management with a focus on ETFs and sector investing. Mr. Thune has 25 years of wealth management experience and has navigated clients through four bear markets and some of the most challenging economic environments in history. As a writer, Kent's articles have been seen on multiple investing and finance websites, including Seeking Alpha, Kiplinger, MarketWatch, The Motley Fool, Yahoo Finance, and The Balance. Mr. Thune'sregistered investment advisory firmis headquartered in Hilton Head Island, SC where he serves clients all around the United States. When not writing or advising clients, Kent spends time with his wife and two sons, plays guitar, or works on his philosophy book that he plans to publish in 2024.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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