Designed to provide broad exposure to the Technology - Semiconductors segment of the equity market, the iShares Semiconductor ETF (
SOXX Quick Quote SOXX - Free Report) is a passively managed exchange traded fund launched on 07/10/2001.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.
The fund is sponsored by Blackrock. It has amassed assets over $9.41 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Semiconductors segment of the equity market. SOXX 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.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.86%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 100% of the portfolio.
Looking at individual holdings, Advanced Micro Devices Inc (
AMD Quick Quote AMD - Free Report) accounts for about 8.58% of total assets, followed by Broadcom Inc ( AVGO Quick Quote AVGO - Free Report) and Nvidia Corp ( NVDA Quick Quote NVDA - Free Report) .
The top 10 holdings account for about 57.72% of total assets under management.
Performance and Risk
The ETF has added about 49.10% and was up about 36.10% so far this year and in the past one year (as of 11/27/2023), respectively. SOXX has traded between $337.53 and $535.64 during this last 52-week period.
The ETF has a beta of 1.32 and standard deviation of 34.46% for the trailing three-year period, making it a high risk choice in the space. With about 35 holdings, it has more concentrated exposure than peers.
IShares Semiconductor ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SOXX is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
SPDR S&P Semiconductor ETF (
XSD Quick Quote XSD - Free Report) tracks S&P Semiconductor Select Industry Index and the VanEck Semiconductor ETF ( SMH Quick Quote SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index. SPDR S&P Semiconductor ETF has $1.36 billion in assets, VanEck Semiconductor ETF has $11.19 billion. XSD has an expense ratio of 0.35% and SMH charges 0.35%. Bottom Line
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