A Review of the Horizons Global Semiconductor Index ETF (CHPS)
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If you’re looking to invest in the semiconductor industry without picking individual stocks, Horizon’s Chips ETF might be worth considering. This Canadian fund, which trades under the ticker CHPS, seeks to replicate the performance of the Solactive Global Semiconductor Index.
Despite having high fees, Horizon’s Chips ETF has outperformed most ETFs in Canada. Over the past year, the fund has gained 71%, and it’s up 22% year-to-date as of early March 2024.
However, it’s important to note that this fund is not for those looking for value or dividend yield. It’s aimed at investors looking to capitalize on the potential total returns of the semiconductor industry.
The fund has a relatively low AUM of $68.4 million, which may be due to the fact that it started in July 2021 and suffered a significant drop during the 2022 bear market. However, it has since recovered and has seen significant inflows over the past few months.
Horizon’s Chips ETF is expensive, with a management expense ratio of 0.55% and a trading expense ratio of 0.18%, working out to be total fees of 0.73%.
The fund has a high turnover ratio, which contributes to its high trading expense ratio. Its weighted average PE ratio is nearly 30x, and its weighted average price to sales ratio is 6.7x.
The top holdings of Horizon’s Chips ETF are publicly listed companies engaged in the production and development of semiconductors. The fund’s holdings are updated regularly, and the best place to find the most up-to-date information is on the fund’s website.
In summary, Horizon’s Chips ETF is a niche ETF that’s aimed at investors looking to capitalize on the potential total returns of the semiconductor industry.
While it’s expensive, the fund has outperformed most ETFs in Canada and may be worth considering for those comfortable with the risks associated with investing in this industry.
Fundamentals of CHPS ETF
It is important to note that CHPS is an index fund, not an actively managed fund.
It also is not for those who are looking for value or dividend yield, as it is expensive. The weighted average PE ratio of the fund is nearly 30X, and the weighted average price to sales ratio is 6.7X. The forecasted 5-year earnings growth for the fund’s holdings is just under 12% annualized.
On a forward basis, the fund is still expensive but it does get a bit better, with a forward price to earnings ratio of 24.2 and a forward price to sales ratio of 6.1.
If you want to own CHPS ETF, you can choose between the Canadian traded version (CHPS.TO) and the US dollar traded version (CHPS.U.TO). The fund pays a distribution annually, but it is relatively insignificant, yielding less than 0.5%.
Performance Analysis
Despite its high fees, CHPS has delivered impressive returns. In 2023, the fund gained 71%, and since inception, it has gained around 57%.
As of early March 2024, the fund is up 22% year-to-date, outperforming most ETFs in Canada. The fund has also experienced significant inflows as of late. This isn’t all that surprising considering the popularity with AI stocks.
CHPS is a volatile fund, with a maximum drawdown of 48.1%. It is ideal for investors looking to capitalize on the potential total returns of the semiconductor industry and AI, but most importantly for those who are willing to take on risk and withstand volatility.
The companies inside the fund are performing exceptionally well, with high return on assets and return on equity, which is a large driver of returns.
Top Holdings and Industry Focus
Many investors are attracted to this ETF because they want to own the entire semiconductor industry without picking a single stock. The semiconductor industry has been experiencing a huge run-up with the AI boom, and this ETF provides exposure to this industry.
The best place to get the top holdings is on the site directly. As of March 1st, 2024, the top holdings include Taiwan Semiconductor Manufacturing Co Ltd (TSM), Intel Corp (INTC), and Nvidia Corp (NVDA), which make up 14.4%, 9.8%, and 8.5% of the fund, respectively.
Final Thoughts
If you’re looking to invest in the global semiconductor industry without the risk of picking a single stock, Horizon’s chips ETF (CHPS) could be a good option for you.
Although the fund has high fees, it has performed exceptionally well, with a gain of 71% over the last year and a current year-to-date return of 22%. However, it is important to note that this fund is not for those seeking value or dividend yield, as it has a weighted average PE ratio of nearly 30X and a weighted average price to sales ratio of 6.7X.
If you are comfortable with the risks and expenses associated with this ETF, it could be a good option for those looking to invest in the semiconductor industry as a whole.