7 Best-Performing Semiconductor ETFs of November 2023 – NerdWallet

Riding high on favorable legislation (the CHIPS and Science Act) and strong demand for faster and more efficient AI chips, the semiconductor industry has outperformed the broader market by a wide margin this year.

One company leading the pack is NVIDIA (NVDA), with a year-to-date gain of more than 200%. It has consistently been among the top S&P 500 performers for 2023.

Many semiconductor stocks are growth stocks — that means they can go through wild price swings in the short term. But if you don’t have the risk appetite for individual stocks, you can also invest in semiconductor exchange-traded funds, or ETFs. These ETFs expose investors to numerous parts of the semiconductor industry and can pad one stock’s downside with another’s gains.

Below is a list of the top seven ETFs in the VettaFi ETF database that have substantial exposure to semiconductor stocks like NVIDIA, ordered by year-to-date performance.

Source: VettaFi. Stock data is current as of Nov. 14, 2023 and is intended for informational purposes only. This list excludes leveraged and single-stock ETFs.

All of the funds shown above are thematic ETFs, but there are a few other types of semiconductor ETFs to be aware of, such as single-stock ETFs and leveraged ETFs.

• Single-stock ETFs, such as the GraniteShares 1.5x Long NVDA Daily ETF (NVDL), seek to deliver some multiple of the daily returns of an individual semiconductor stock. (The fund in question returns 1.5 times the daily return of NVIDIA, for example). These tend to be used for high-risk, short-term speculation on a single company.

• Leveraged ETFs, such as the Direxion Daily Semiconductor Bull 3x Shares (SOXL), seek to deliver some multiple of the daily return of an entire index — three times the return of the NYSE Semiconductor Index, in the case of the Direxion fund. Like single-stock ETFs, they are often used for speculative trading.

• Thematic ETFs, such as the First Trust Nasdaq Semiconductor ETF, are basically just semiconductor index funds, and may be used for more long-term investing.

Then, you’ll need to determine how semiconductor ETFs fit into your portfolio — and which kind you want. If you’re day trading with a little bit of “play money,” and you don’t mind taking on a lot of risk for a potential short-term profit, single-stock ETFs or leveraged ETFs in the semiconductor space might be what you’re looking for.

If you’re looking to invest in semiconductor stocks for the long-term, however, you may find a thematic semiconductor ETF to be less volatile.