Investing in Semiconductor ETFs

Updated: Jan 15

Increasing demand from the main end-user drivers' such as computing, communication and industrial categories, along with the shortage of chips are offset the traditional semiconductor industry risks related to cycling nature and supply chain vulnerabilities. Investing in semiconductor ETFs and gaining exposure to the overall sector growth will likely increase profitability.

From the universe of over 41,000 ETFs, we select the subset of ETFs in the semiconductor industry.

The two worst performing ETFs are SSG and SOXS, the leveraged inverse ETFs with 2x/3x exposure to the modifications of the market-cap-weighted indexes in the semiconductor industry. Investing in such ETFs is recommended only for the short term, for hedging purposes during the bearing market trends.

Best semiconductor ETFs

Three top semiconductor ETFs demonstrating the sustainable positive return and outperforming SPY are:

  • Semiconductor ETF ( NASDAQ: SOXL ) Direxion Daily Semiconductor Bull 3X Shares: This ETF contains 10 chip companies, has an annual expense ratio of 0.99% and manages more than $4.63 billion in assets. Top 10 Holdings: 87 % of Total Assets

  • ProShares Ultra Technology (ROM) Semiconductor ETF (NYSEArca: ROM): This fund's composition: 87 % of stocks including 3 chip companies of 25%. It has an annual expense ratio of 0.9% and manages $8.67 billion in assets.

  • VanEck Vectors Semiconductor ETF (SMH Ultra Technology (ROM) Semiconductor ETF (NasdaqGM: SMH) ETF closely replicates the MVIS® US Listed Semiconductor 25 Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund's benchmark index. The index includes common stocks and depositary receipts of U.S. exchange-listed companies in the semiconductor indu