Exchange-traded funds (ETFs) focused on the semiconductor industry give investors access to the companies that create and distribute the essential components of today's technological infrastructure. The proliferation of electronic gadgets and the development of cutting-edge technologies like AI and the IoT have contributed to the semiconductor industry's meteoric rise in recent years. By purchasing semiconductor ETFs, investors can benefit from the industry's upward trajectory while spreading risk across multiple companies.

The VanEck Vectors Semiconductor ETF (SMH), the iShares PHLX Semiconductor ETF (SOXX), the Invesco Dynamic Semiconductors ETF (PSI), the First Trust Nasdaq Semiconductor ETF (FTXL), and the SPDR S&P Semiconductor ETF (XSD) are just a few of the top semiconductor exchange-traded funds available today. These ETFs have proven performance records and provide investors with investment approaches, such as diverse portfolios and specialised quantitative procedures, to meet their individual goals.

VanEck Vectors Semiconductor ETF (SMH)

With approximately $7 billion in AUM, the VanEck Vectors Semiconductor Exchange Traded Fund (SMH) is one of the largest and best semiconductor etfs. The fund buys shares in between twenty-five and fifty firms that make memory and storage chips, microprocessors, and other semiconductor-related items. The SMH has a solid performance history, with an annualised return of 27.6% over the past five years. Those seeking exposure to the semiconductor industry may appreciate the fund's low expense ratio of 0.35%.

PHLX Semiconductor ETF (SOXX) from iShares

Another top semiconductor etfs with nearly $6 billion in assets under management is the iShares PHLX Semiconductor ETF (SOXX). The PHLX Semiconductor Sector Index comprises 30 different companies that all work in some way with semiconductors or semiconductor-related products, and this fund mirrors the performance of that index. The SOXX is heavily weighted toward large-cap semiconductor companies like Intel, NVIDIA, and Texas Instruments. Although the fund's expense ratio is higher than the SMH at 0.46%, its performance over the past five years has been excellent, returning an average of 26.9% annually.

Semiconductor Exchange Traded Fund (PSI) from Invesco

Investing in companies that design and manufacture semiconductors and associated components is the focus of the Invesco Dynamic Semiconductors ETF (PSI), a highly specialised semiconductor ETF. Earnings growth, price momentum, and valuation are only some metrics used by the fund's quantitative approach to stock picking. Although the PSI's AUM is only about $1.5 billion, it has produced impressive returns over the past five years, averaging 27.9% annually. This fund's higher cost ratio of 0.58% could be justified if you seek a more specialised approach to the electronics industry.

First Trust Nasdaq Semiconductor ETF (FTXL)

Another dedicated semiconductor ETF is the First Trust Nasdaq Semiconductor ETF (FTXL), which invests in companies trading on the Nasdaq Stock Market engaged in research, development, production, and retail sale of semiconductors and semiconductor components. Revenue growth, profit growth, and return on equity are only some metrics used by the fund's quantitative technique in making investment decisions. Although its AUM is lower than the FTXL's at roughly $400 million, the FTXL has nonetheless had solid performance over the past five years, with an average annual return of 30.4%. Investors seeking exposure to the technology sector may find the fund's focus on businesses listed on the Nasdaq to be worth the higher expense ratio of 0.60%.

SPDR S&P Semiconductor ETF (XSD)

Companies that work on, sell, or otherwise deal in semiconductors and related products are the focus of the SPDR S&P Semiconductor ETF (XSD), an exchange-traded fund. The fund aims to provide returns comparable to publicly listed US companies in the semiconductor sector represented by the S&P Technology Select Sector Index. The XSD invests in over a hundred firms, preferring those with middle-market and small-market capitalisations. Companies, including Advanced Micro Devices, Micron Technology, and NXP Semiconductors, are among the fund's most significant holdings. Investors interested in getting a taste of various semiconductor companies would find XSD's strategy appealing.

Conclusion

Exposure to the dynamic semiconductor business can be beneficial, and investors can do so through exchange-traded funds (ETFs). The industry's potential for expansion is fueled by the rising demand for electronic gadgets and the introduction of innovative technology. Investors can reduce their stock market risk and obtain exposure to various semiconductor companies by purchasing exchange-traded funds.