Productivity Premium ETFs

Productivity premium companies are the first category in my framework for investing in a high debt-to-GDP world.

These companies are the ones that build the tools the rest of the economy runs on.

It can be risky and time consuming to invest in single stocks, so I decided to create a resource that identifies ETFs that best represent the categories I created.

The ETFs I found aren’t a perfect 100% fit for each tier (there’s not a semiconductor hardware only ETF for example), but they do a good job of giving you exposure to each industry.

I listed several ETFs in each tier with some basic information below.

Tier 1A: Chips and Hardware ETFs

These ETFs give exposure to the physical foundation of the modern economy. The companies in these ETFs are involved in semiconductor design, fabrication, and equipment.

SMH (VanEck Semiconductor ETF)

SOXX (iShares Semiconductor ETF)

SOXQ (Invesco PHLX Semiconductor ETF)

XSD (State Street SPDR S&P Semiconductor ETF)

SMH is the largest and most popular semiconductor ETF on this list. It’s also heavily concentrated with its top 10 companies representing 71% of the fund.

SOXX and SOXQ provide exposure to semiconductors with less concentration and lower expense ratios. SOXQ has the lowest expense ratio on the list at 0.19%.

XSD is unique because it is an equal-weight fund, meaning that each company has roughly the same weight in the index.

Tier 1B: Cloud and Software Infrastructure
Cloud ETFs

These ETFs give exposure to the software layer than turns raw computing power into tools businesses use. The companies in these ETFs focus on cloud platforms, enterprise software, and networking.

SKYY (First Trust Cloud Computing ETF)

IGV (iShares Expanded Tech Software Sector ETF)

DTCR (Global X Data Center and Digital Infrastructure ETF)

SKYY is the largest cloud computing ETF by total assets. It provides exposure to cloud computing companies. It is the least concentrated ETF on the list.

IGV provides exposure to companies in the software, cloud, and digital media industries. It has the largest AUM and lowest expense ratio on the list.

DTCR invests in companies that operate data centers and other digital infrastructure. It is the most concentrated fund on the list.

Broad Productivity Premium ETFs

If the ETFs above don’t interest you, broad technology ETFs offer some exposure to productivity premium companies as well with some caveats.

There are some companies in the technology sector that I don’t view as a pure productivity premium. Apple is one example.

VGT (Vanguard Information Technology ETF)

IXN (iShares Global Tech ETF)

VGT (or any other low cost broad technology ETF) is a simple way to own companies in the productivity premium category.

IXN has a higher expense ratio, but it includes international tech companies such as TSMC, ASML, Samsung, and SK Hynix.