Horizons ETFs has unveiled Canada’s first thematic ETF to target companies operating within the global semiconductor industry.
Steve Hawkins, President and CEO of Horizons ETFs.
The Horizons Global Semiconductor Index ETF (CHPS CN) has been listed on Toronto Stock Exchange with a management fee of 0.45%.
Semiconductors play a critical role across the electronics value chain, and their importance is only expected to grow in an increasingly digital global economy.
As the fourth most-traded product globally – after crude oil, refined oil, and automotive vehicles – semiconductors are core enablers of the data revolution and are at the forefront of innovative technologies and services.
Steve Hawkins, President and CEO of Horizons ETFs, said: “CHPS offers a way to get exposure to technology without necessarily worrying about what the next latest and greatest trend is, because more than likely, some form of semiconductor is powering that technology. As the first ETF listed in Canada to provide focused global exposure to semiconductors, CHPS offers an opportunity to go directly to the ‘heart’ of technology investing.”
The semiconductor market is also going through a period of transition as the supply of semiconductors has been greatly hampered by the Covid-19 pandemic. Chip production slowed at the same time that demand for semiconductor technology continues to increase owing to the global 5G rollout, greater interconnectivity, and smarter consumer technology.
This dynamic has led the World Semiconductor Trade Statistics (WSTS) to forecast growth in the semiconductor industry to rise from 6.8% in 2020 to 19.7% in 2021, corresponding to a market size of $527 billion. By 2022, WSTS expects growth to normalize at around 8.8%.
Hawkins added: “Amidst a global semiconductor shortage, we have seen how critical these materials are for the manufacturing of numerous technologies from telecommunications systems to household appliances and even most automobiles. Additionally, commentary from the industry suggests demand for semiconductors will continue to outpace supply for years to come, highlighting the continued importance of these manufacturers into the future and the prominence of this investment theme.”
Methodology
The fund is linked to the Solactive Capped Global Semiconductor Index which selects its constituents from a universe of large and mid-cap stocks listed in developed markets, including South Korea and Taiwan.
The methodology harnesses FactSet’s Revere Business Industry Classification System (RBICS) to screen for firms operating in the semiconductor industry. This includes semiconductor manufacturers as well as companies providing equipment and services within the semiconductor industry.
The 50 largest eligible stocks are selected for inclusion and weighted by float-adjusted market capitalization subject to a 10% cap per security. The index is reconstituted and rebalanced quarterly.