Like Nvidia Stock But Prefer ETFs? This Is the Best Semiconductor ETF to Invest in Artificial Intelligence (AI) – Yahoo Canada Finance
Written by Amy Legate-Wolfe at The Motley Fool Canada
Every year, it seems there is one stock that surges above the rest, hitting headlines and causing discussions at dinner tables. And this year, that stock has been Nvidia (NASDAQ:NVDA). The semiconductor stock surged in share price, with semiconductor demand increasing — especially on the back of artificial intelligence (AI) use. Yet, if you’re not one to sink all your cash in one growth stock, I get it.
That’s why today, we’re going to look at a semiconductor exchange-traded fund (ETF) instead. Let’s go over what investors should look for when considering a semiconductor ETF and the best option out there.
First off, investing in a semiconductor ETF can be a smart move given the growth potential of the semiconductor industry. But there are certainly some factors investors should look for to find the right semiconductor ETF.
Investors need to first consider the expense ratio. This is the annual fee charged by the ETF provider for managing the fund. Look for a low expense ratio to minimize costs and maximize your returns over time. From there, understand the index the ETF is tracking. Some ETFs may track broad semiconductor indices, while others may focus on specific segments within the semiconductor industry, such as equipment manufacturers or semiconductor manufacturers. Then, ensure that the ETF has sufficient trading volume and liquidity to allow you to buy and sell shares easily without significant price impact.
Next, get into the ETF itself. Check the holdings of the ETF to ensure it provides adequate diversification across different semiconductor companies. A well-diversified ETF can help mitigate the risk of investing in individual stocks. Evaluate the historical performance of the ETF compared to its benchmark index and peers. While past performance doesn’t guarantee future results, it can provide insights into how the ETF has performed under different market conditions. Then, review the top holdings of the ETF to see which semiconductor companies it invests in. Make sure these align with your investment goals and risk tolerance.
If you’re then looking for an ETF that checks all the boxes, consider VanEck Semiconductor ETF (NASDAQ:SMH). This is one of the most popular and widely traded semiconductor ETFs. SMH seeks to track the performance of the MVIS US Listed Semiconductor 25 Index. This index includes 25 of the largest U.S.-listed semiconductor companies, covering a broad spectrum of the semiconductor industry.
The ETF provides exposure to various segments within the semiconductor industry, including companies involved in the design, manufacture, and distribution of semiconductors and semiconductor-related products. Its top holdings also include companies such as Nvidia stock as well as the other major winners including Taiwan Semiconductor Manufacturing and Advanced Micro Devices.
What’s more, SMH typically has a relatively low expense ratio compared to actively managed funds, which helps minimize the costs associated with holding the ETF over the long term. SMH is also often highly liquid, meaning that there is usually significant trading volume, making it easier for investors to buy and sell shares without significant price impact.
Finally, the performance of SMH is tied to the overall performance of the semiconductor industry. Given the cyclical nature of the semiconductor market, the fund’s performance can be influenced by factors such as global demand for electronic devices, technological advancements, and macroeconomic trends. However, in the last year alone shares have climbed by 78%, as of writing.
Overall, if you’re looking to get into semiconductor stocks but don’t want to be tied down, SMH ETF is a great option. With a 0.35% expense ratio, shares up 27% year to date, and a 0.49% dividend yield, it’s certainly a strong option for investors to consider.
The post Like Nvidia Stock But Prefer ETFs? This Is the Best Semiconductor ETF to Invest in Artificial Intelligence (AI) appeared first on The Motley Fool Canada.
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.
Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $15,578.55!*
Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.
See the 10 stocks * Returns as of 3/20/24
More reading
10 Stocks Every Canadian Should Own in 2024 [PREMIUM PICKS]
Can You Guess the 10 Most Popular Canadian Stocks? (If You Own Them, You Might Be Losing Out.)
More Canadian Stock Market News
How to Build a Bulletproof Monthly Passive-Income Portfolio in 2024 With Just $25,000
Subscribe to Motley Fool Canada on YouTube
Two New Stock Picks Every Month!
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
2024
Today's rally isn't a durable bull run, but is driven by investors who want to "grasp the suds of yesterday's bubble," John Hussman wrote.
Here are three TSX stocks that are set to increase their dividends later this year. The post 3 Stocks Set for Dividend Increases This Year appeared first on The Motley Fool Canada.
Nvidia stock is on fire but you probably don’t need to buy it now. If you don’t own individual shares, watching Nvidia stock soar the way it has can be painful. Nvidia stock has earned every percentage point of those gains.
A bullish bet on a safe haven asset.
Here are two top dividend stocks long-term investors may certainly want to consider for their yields and growth profiles right now. The post 2 Dividend Stocks Paying 5% or More That Could Beat the Market in 2024 and Beyond appeared first on The Motley Fool Canada.
While the Nasdaq Composite is at a record high, some experts believe that a shift is coming in the market.
These three stocks should be some of the first to bounce back in a bull market, which makes now a great time to buy some up! The post Bull Market Buys: 3 Magnificent Stocks to Own for the Long Run appeared first on The Motley Fool Canada.
TORONTO — Fitch Ratings Inc. says it has downgraded its outlook on TD Bank Group to negative from stable because of the potential fallout from anti-money laundering deficiencies at the bank. The credit rating agency, which at the same time affirmed its long-term credit rating of AA- for the bank, says the negative outlook reflects the uncertainty stemming from the multiple investigations the bank faces about its anti-money laundering practices in the U.S. Fitch says the outcomes could include bo
If the Canadian dollar weakens, this one industry is set to make enormous profits, and investors can get in on the action. The post Lower Loonie? This Sector’s a Gusher Anyway appeared first on The Motley Fool Canada.
We recently analyzed the top utilities stocks hedge funds are buying to profit from the AI-led boom in the industry. Since Vistra Corp. (NYSE:VST) was part of the list, the stock deserves a deeper look. But first, let’s see why everyone’s taking about AI catalysts for utilities stocks these days. The AI revolution that started with […]
Canada's Finance Minister Chrystia Freeland said on Tuesday that the federal budget presented to the Parliament last month had created conditions for interest rates to come down. The government has "been very mindful of acting in such a way that would create conditions that support the decline in inflation, or creating conditions that would make it possible for the (central) bank to bring interest rates down," she told reporters at a conference in Ottawa. She, however, said the Bank of Canada (BoC) is independent and it will be the bank's decision to cut interest rates on June 5 or not.
The TFSA is the perfect place to compound wealth over decades. Don't pay any tax on these top five growth stocks with big upside ahead! The post 5 Canadian Stocks to Hold in Your TFSA For Decades appeared first on The Motley Fool Canada.
The cost of recharging an EV for a year remains far cheaper than paying for gas to drive the same distance, no matter where you live.
Chinese automaker BYD (1211.HK) has launched hybrid vehicles with a 1,300-mile driving range for $13,800. Yahoo Finance's Alexandra Canal and Seana Smith break down the company's latest move and position in a heated EV race. For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Melanie Riehl
The Globe and Mail claimed that the CPP Board mismanaged Canadians' money, but it beat the returns earned by the iShares S&P/TSX Composite Index Fund (TSX:XIC). The post No, the CPP Didn’t Squander $46 Billion of Taxpayer Money appeared first on The Motley Fool Canada.
Apple stock has been making a comeback lately, and the artificial-intelligence upgrade coming for iPhones will drive shares even higher, said BofA Securities. Shares of Apple had a challenging start to the year as investors digested reports of weak demand in China and awaited for generative artificial-intelligence updates. It seemed that every other tech company was releasing its plans to get ahead in the GenAI race, but Apple has yet to announce any major updates.
(Bloomberg) — Activist investor Nelson Peltz has sold his entire stake in Walt Disney Co., CNBC reported, citing a person with knowledge of the matter.Most Read from BloombergWorld’s Largest Nuclear Plant Sits Idle While Energy Needs SoarWarning Signals Are Flashing for Homeowners in Texas and Florida‘Not Gonna Be Pretty:’ Covid-Era Homebuyers Face Huge Rate JumpNew BYD Hybrid Can Drive Non-Stop for More Than 2,000 KilometersInsurers Sink as UnitedHealth Sees ‘Disturbance’ in MedicaidPeltz’s Tr
Patience can pay off by investing in these two value stocks with nice dividends and the potential to turn around. The post Love Value Stocks? 2 That Are Screaming Buys in May 2024 appeared first on The Motley Fool Canada.
Here's why Shopify (TSX:SHOP) could be the ultimate growth stock long-term investors want to consider at this current point in the cycle. The post The Ultimate Growth Stock to Buy With $1,000 Right Now appeared first on The Motley Fool Canada.
The increase of AI investment has continued to boost optimism over Nvidia's growth as the chipmaker continues its record-setting stock rally.