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Top 10 Semiconductor ETFs to Buy in 2022

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·8 min read
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In this piece we will take a look at the top ten semiconductor ETFs to buy in 2022. If you want to jump ahead to the top five ETFs in this list, then head on over to Top 5 Semiconductor ETFs to Buy in 2022.

The semiconductor industry is the backbone of the technology sector as it is responsible for providing the equipment on which gadgets run. As a testament to its strength, there are several research reports out there that have blossoming estimates for the semiconductor industry, despite the market-wide downturns that have rattled investor confidence throughout the course of this year.

Starting with a report from Fortune Business Insights, the industry was estimated to be worth $452 billion in 2021. From this, the research firm expects the industry to grow at a compounded annual growth rate (CAGR) of 9.2% to have an estimated final value of $893 billion as 2029 comes to an end. The drivers of this growth are believed to be a growing share of consumer electronics devices as well as advanced technologies such as artificial intelligence and machine learning that enable corporations to revamp their operations and generate unique products and insights.

Another report from Design & Reuse takes a look at the overall semiconductor sales growth. It outlines that the CAGR for this metric was 25% last year and will stand at 11% this year. Additionally, and more importantly, it also states that if the CAGR does meet 11% in 2022, then it will be the first time that the semiconductor industry will grow in double digits for three consecutive years since 1993-1995.

Finally, renowned firm McKinsey has some of the most optimistic takes on the chip sector. It shares that the industry grew by 20% in 2021 and stood at $600 billion. Furthermore, McKinsey estimates that the sector will grow at an aggregate annual percentage ranging from 6% to 8% by 2030. This in turn will lead to a trillion dollar industry by the end of this decade, if price increases and balanced supply and demand remain in play.

Therefore, it is a no brainer that the semiconductor industry merits a serious look. Some of the top companies that are part of notable semiconductor ETFs include Taiwan Semiconductor Manufacturing Company (NYSE:TSM), Broadcom Inc. (NASDAQ:AVGO) and Advanced Micro Devices, Inc. (NASDAQ:AMD).

Intel, Semiconductor, Chip
Intel, Semiconductor, Chip

Photo by Slejven Djurakovic on Unsplash

Our Methodology

For researching this piece, we took a look at all the semiconductor ETFs out there and then analyzed them through several factors such as their net asset values, year to date returns, constituent companies, and issuing firms. These points have been provided with each of the funds shown in this piece.

Top 10 Semiconductor ETFs to Buy in 2022

10. ProShares UltraShort Semiconductors (NYSE:SSG)

ProShares UltraShort Semiconductors (NYSE:SSG) is what is commonly known as an 'inverse' fund. As this moniker suggests, these funds are designed to generate value for their investors when the stocks they are made up of are falling. While it sounds counterintuitive to include the ProShares UltraShort Semiconductors (NYSE:SSG) in our list, the current state of the chip sector, which has seen several large companies bleed market value, can result in bearish investors finding value from an ETF that is in an inverse of the market.

The largest constituent of the ProShares UltraShort Semiconductors (NYSE:SSG) is the Santa Clara, California chip designer NVIDIA Corporation (NASDAQ:NVDA). The company's shares represent 27.65% of the fund's $7.47 million in assets under management (AUM). NVIDIA is the world's largest supplier of graphics processing units (GPUs) and the current bloodbath in the cryptocurrency sector has led to worries about its products generating strong interest from the consumer market.

Insider Monkey's Q1 2022 survey of 912 hedge funds revealed that 102 had held a stake in NVIDIA Corporation (NASDAQ:NVDA). The firm's largest investor in our database is Ken Fisher's Fisher Asset Management which owns 7.3 million shares that are worth $1.9 billion.

9. KraneShares CICC China 5G & Semiconductor Index ETF (NYSE:KFVG)

As opposed to most other semiconductor ETFs out there which target the U.S. stock market, KraneShares CICC China 5G & Semiconductor Index ETF (NYSE:KFVG) is a fund that consists of companies that are operating in China. It tracks an index developed by the China International Capital Corporation and is a key ETF since China plans to vastly boost its local semiconductor manufacturing over the coming years, and the country has one of the strongest ecosystems of fifth generation (5G) infrastructure in the world. The Made in China 2025 initiative plans to source 70% of the country's chip requirements from local companies, and it is expected that by the same year 40% of the global 5G user base will be in the East Asian country.

The largest holding of KraneShares CICC China 5G & Semiconductor Index ETF (NYSE:KFVG) is Luxshare Precision Industry Co Ltd which is best known for supplying products to the Cupertino, California consumer technology giant Apple, Inc. (NASDAQ:AAPL). These products include interconnect devices and other connectors. The fund also consists of Foxconn, which is the primary contract manufacturer for Apple, Inc. (NASDAQ:AAPL) and is responsible for the bulk of the global iPhone production.

8. Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ)

Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) is a semiconductor ETF that specifically targets companies that are listed on U.S. stock markets. It is based on the PHLX Semiconductor Sector Index (Index) and has total assets under management that are worth $48.7 million. The fund measures the performance of the 30 largest U.S. listed chip companies and it is reformed each year in September with rebalancing taking place at the end of each quarter.

PHLX Semiconductor Sector Index (Index)'s largest holding is in Texas Instruments Incorporated (NASDAQ:TXN), which is one of the oldest chip companies in America. The company is involved in selling chip products that let technology gadgets manage their power and covert signals from digital to analog.

Insider Monkey took a look at 912 hedge fund portfolios for this year's second quarter to discover that 46 had bought a stake in Texas Instruments Incorporated (NASDAQ:TXN). Out of these, the largest belongs to Jean-Marie Eveillard's First Eagle Investment Management which owns 3.3 million shares that are worth $621 million.

Other notable companies in the Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) are NVIDIA Corporation (NASDAQ:NVDA) and Intel Corporation (NASDAQ:INTC), both of which are giants of the semiconductor world.

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

First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL) is run by First Trust Portfolios L.P and it is designed to mirror the performance of the Nasdaq US Smart Semiconductor Index. It does this via copying the weightage of individual component companies of the NASDAQ Semi Index and seeks to generate returns that are 95% correlated with it. The fund has a total of $71 million in assets under management.

The fund also has a dividend per share of $0.0981 as of July 2022 and the largest chunk of shares in it are of Analog Devices, Inc. (NASDAQ:ADI). This company is headquartered in Wilmington, Massachusetts, United States and it provides products that engage in signals processing in a wide variety of computing applications. It sells to customers all over the globe and to several industries such as aerospace, industrials, automotive, communications, and consumer technology.

Out of the 912 hedge funds part of Insider Monkey's portfolio survey for this year's first quarter, 67 had owned Analog Devices, Inc. (NASDAQ:ADI)'s shares. The firm's largest investor is John Armitage's Egerton Capital Limited with a $615 million stake courtesy of 3.7 million shares.

6. ProShares Ultra Semiconductors (NYSE:USD)

ProShares Ultra Semiconductors (NYSE:USD) is another semiconductor ETF provided by ProShares. This fund seeks to double the daily returns offered by the Dow Jones Semiconductors Index tracking semiconductor firms listed in the United States. This also leads to the fund mirroring not only its parent index's returns but also its losses. The fund is currently worth $146 million.

The ProShares Ultra Semiconductors (NYSE:USD) has a price to earnings (P/E) ratio of 32.65 and a dividend yield of 1.15%. Out of the 33 companies that it follows, the top three are NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC), and Broadcom Inc. (NASDAQ:AVGO). All three are key players in the semiconductor industry, and Intel and NVIDIA are leaders in their space.

Insider Monkey's 912 hedge fund survey for Q1 2022 saw 76 funds having bought Intel Corporation (NASDAQ:INTC) shares. The company is currently in the midst of entering the contract chip manufacturing sector and introducing new manufacturing technologies to the market.

The ProShares Ultra Semiconductors (NYSE:USD) joins our list as one of the semiconductor ETFs that will give you a taste of top firms such as the Taiwan Semiconductor Manufacturing Company (NYSE:TSM), Broadcom Inc. (NASDAQ:AVGO), and Advanced Micro Devices, Inc. (NASDAQ:AMD).

 

Click to continue reading and see Top 5 Semiconductor ETFs to Buy in 2022.

 

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Disclosure. None. Top 10 Semiconductor ETFs to Buy in 2022 is originally published on Insider Monkey.