The Best Semiconductor ETFs in Canada for February 2025



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        Key takeaways

        Semiconductors Drive Innovation – These ETFs offer exposure to the backbone of modern technology, from AI to 5G and cloud computing.

        Different Investment Approaches – While CHPS provides global semiconductor exposure, SOXX and XSD focus on the U.S. market with different weighting strategies.

        Volatility and Growth Potential – The semiconductor sector is cyclical, with high volatility but strong long-term growth prospects.

        One ETF I like way better than the ones on this list.

        Semiconductor stocks and Canadian ETFs with semiconductor companies have skyrocketed in demand, particularly post-pandemic.

        In this article, I’m going to dive into one of the best ETFs in Canada when it comes to semiconductors. However, there is a key issue here in Canada when it comes to semiconductor funds, and I’m going to address that first.

        If you want exposure to semiconductors, there are limited ETF options in Canada

        On the Toronto Stock Exchange, we only have a single ETF from Horizons ETF Management that tracks the semiconductor industry. For that reason, you’ll need to head south of the border and buy US-based ETFs if you want to explore other options outside of the single Canadian one.

        I will mention the Canadian semiconductor ETF, but will then explore some US options for those willing to exchange their Canadian dollars and invest in US ETFs, because ultimately they have a much broader selection.

        Lets get started.

        Global exposure to semiconductor leaders

        Horizons Global Semiconductor Index ETF (TSE:CHPS)

        CHPS tracks the Solactive Capped Global Semiconductor Index, offering exposure to a diversified mix of top semiconductor companies worldwide. It includes major players from the U.S., Taiwan, and other key semiconductor markets.

        • Diversified Global Exposure – Unlike U.S.-focused ETFs, CHPS includes major international semiconductor firms.
        • High Growth Potential – Semiconductors are critical to AI, 5G, and cloud computing, driving long-term demand.
        • Canadian-listed Convenience – CHPS trades in CAD, making it accessible for Canadian investors without currency conversion.
        • Strong Holdings in Industry Leaders – Includes companies like NVIDIA, TSMC, and Broadcom.
        • Capped Index Approach – Limits the weight of any single company, preventing overconcentration.
        • Chip Demand for AI and Automation – Growth in AI applications continues to fuel semiconductor sales.
        • U.S.-China Tech Tensions – Global supply chain shifts could impact semiconductor trade flows.
        • Government Subsidies – The CHIPS Act and other policies may benefit semiconductor firms.
        • Cyclical Nature of Semiconductors – Demand for chips fluctuates with economic cycles.
        • Currency Exposure – CHPS holds international stocks, so currency fluctuations may affect returns.
        • Regulatory Challenges – Export restrictions and tariffs could impact global semiconductor firms.

        Heavyweight U.S. semiconductor index ETF

        iShares Semiconductor ETF (SOXX)

        SOXX tracks the ICE Semiconductor Index, providing exposure to the largest U.S. semiconductor firms. It is market-cap weighted, meaning larger companies like NVIDIA and Broadcom dominate the fund.

        • Top-Tier U.S. Semiconductor Firms – Invests in the largest, most influential semiconductor companies.
        • Market-Cap Weighting Benefits – Heavily weighted toward industry leaders driving growth.
        • Liquidity and Stability – Large, established companies offer relative stability within the volatile sector.
        • Benefiting from U.S. Incentives – U.S. government support for domestic chip production aids holdings.
        • Strong Historical Performance – SOXX has outperformed many sector ETFs over the long term.
        • AI and Data Centers – Increasing AI adoption boosts demand for high-performance chips.
        • U.S. Chip Manufacturing Expansion – Companies are investing in domestic semiconductor production.
        • Electric Vehicle Growth – More semiconductor content in EVs drives demand.
        • High Concentration in Few Companies – A handful of firms make up a significant portion of the ETF.
        • Economic Slowdowns Impact Sales – Semiconductor stocks tend to drop sharply in downturns.
        • Tech Sector Volatility – The ETF is sensitive to overall tech stock fluctuations.

        Equal-weighted semiconductor ETF

        SPDR S&P Semiconductor ETF (XSD)

        XSD follows the S&P Semiconductor Select Industry Index and uses an equal-weight strategy, giving smaller semiconductor companies as much influence as giants like NVIDIA and AMD.

        • Balanced Exposure Across the Industry – Equal weighting prevents overconcentration in a few large firms.
        • More Small- and Mid-Cap Holdings – Provides exposure to high-growth emerging semiconductor firms.
        • Greater Volatility, Higher Upside – Smaller companies tend to be more volatile but offer greater return potential.
        • Pure Semiconductor Play – Unlike SOXX, which includes diversified chip companies, XSD focuses only on semiconductors.
        • Long-Term Industry Growth – Expanding semiconductor demand in AI, gaming, and cloud computing supports holdings.
        • Emerging Semiconductor Innovators – XSD benefits from up-and-coming players in chip design and manufacturing.
        • Autonomous Vehicles – Self-driving technology needs advanced semiconductors, boosting demand.
        • Government Investments in Chips – U.S. and global incentives help drive industry expansion.
        • High Volatility – Smaller firms tend to have bigger price swings than large-cap semiconductor stocks.
        • Lack of Mega-Cap Dominance – Equal weighting can reduce exposure to the biggest chipmakers leading the sector.
        • Competitive Pressures – Smaller companies must compete with giants like NVIDIA and Intel.

        Overall, the market for semiconductor ETFs is limited, but there are some robust options

        Because this is such a niche industry, there isn’t a need for many ETFs. These three options listed above will give you more than enough exposure to the industry.

        If you’re a stickler for keeping your investments in CAD, Horizon’s CHPS is worth a look. You just need to keep in mind that the smaller ETF does come with higher fees, about $2 extra per year for every $1000 you invest relative to the other funds.

        If you’re willing to convert your capital to USD, it opens up a few more doors for you as you could look to the iShares fund or SPDR fund. They have lower fees, lower concentration when it comes to their top holdings, and overall larger AUM.

        Keep in mind, however, that when you convert to USD, you are not only exposing yourself to these companies, but also the fluctuations in currency.

        Investing in the development of semiconductors, semiconductor equipment, the supply of semiconductors, or other various technology ETFs is a bet that technological advancements will continue to be made in the future and at a rapid pace. In my opinion, that is a bet that will likely pay off.

        What are the best-performing semiconductor stocks?

        When we think of the best-performing semiconductor stocks over the last few years, we think of companies like Nvidia (NVDA), Taiwan Semiconductor Manufacturing Co (TSM), Advanced Micro Devices (AMD), and Qualcomm (QCOM).

        Of these companies, the lowest return over the last half decade has been Qualcomm, with a 16% annualized return. This outperforms any major North American stock market index over that same timeframe. The largest returns? NVIDIA, by a large marin.

        $10,000 invested in NVIDIA just 5 years ago would now be worth over $170,000 today!

        Remember, past performance is not a guarantee of future results. However, there is no doubt there is still potential here.

        Are semiconductor ETFs a good investment for my portfolio?

        There is no doubt that the semiconductor industry will continue to grow as technological advancements are made at a rapid pace. Generally, semiconductor ETFs are thought of as solid investments.

        Picking individual stocks is complex, and many investors fear they may pick the wrong “horse in the race.” A prime example would be the explanation above. Although Qualcomm would have gotten you 16% annualized returns, you would have missed out on some life-changing returns from NVIDIA.

        Therefore, semiconductor ETFs may be wise investments for those who want exposure to the sector but don’t want to pick individual holdings.

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