Back to top

Image: Bigstock

Is iShares Semiconductor ETF (SOXX) a Strong ETF Right Now?

Read MoreHide Full Article

A smart beta exchange traded fund, the iShares Semiconductor ETF (SOXX - Free Report) debuted on 07/10/2001, and offers broad exposure to the Technology ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

SOXX is managed by Blackrock, and this fund has amassed over $9.02 billion, which makes it one of the largest ETFs in the Technology ETFs. This particular fund seeks to match the performance of the PHLX SOX Semiconductor Sector Index before fees and expenses.

The ICE Semiconductor Index measures the performance of U.S. traded securities of companies engaged in the semiconductor business.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.43% for this ETF, which makes it one of the cheaper products in the space.

It's 12-month trailing dividend yield comes in at 0.72%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

SOXX's heaviest allocation is in the Information Technology sector, which is about 100% of the portfolio.

When you look at individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 8.91% of the fund's total assets, followed by Broadcom Inc (AVGO - Free Report) and Intel Corporation Corp (INTC - Free Report) .

SOXX's top 10 holdings account for about 47.7% of its total assets under management.

Performance and Risk

So far this year, SOXX has lost about -14.27%, and is up about 12.47% in the last one year (as of 04/01/2022). During this past 52-week period, the fund has traded between $387.58 and $555.63.

The fund has a beta of 1.16 and standard deviation of 36.27% for the trailing three-year period, which makes SOXX a high risk choice in this particular space. With about 35 holdings, it has more concentrated exposure than peers.


IShares Semiconductor ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

SPDR S&P Semiconductor ETF (XSD - Free Report) tracks S&P Semiconductor Select Industry Index and the VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index. SPDR S&P Semiconductor ETF has $1.39 billion in assets, VanEck Semiconductor ETF has $8.67 billion. XSD has an expense ratio of 0.35% and SMH charges 0.35%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Published in