Should You Invest in the iShares Semiconductor ETF (SOXX)?
Sector ETF report for SOXX
If you're interested in broad exposure to the Technology - Semiconductors segment of the equity market, look no further than the iShares Semiconductor ETF (SOXX), a passively managed exchange traded fund launched on 07/10/2001.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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 11, placing it in bottom 31%.
The fund is sponsored by Blackrock. It has amassed assets over $9.85 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.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.43%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.62%.
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, Nvidia Corp (NVDA) accounts for about 8.91% of total assets, followed by Broadcom Inc (AVGO) and Intel Corporation Corp (INTC).
The top 10 holdings account for about 55.95% of total assets under management.
Performance and Risk
The ETF has lost about -3.69% and was up about 39.14% so far this year and in the past one year (as of 01/06/2022), respectively. SOXX has traded between $375.21 and $555.63 during this last 52-week period.
The ETF has a beta of 1.13 and standard deviation of 34.69% 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 an excellent 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) tracks S&P Semiconductor Select Industry Index and the VanEck Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index. SPDR S&P Semiconductor ETF has $1.55 billion in assets, VanEck Semiconductor ETF has $7.30 billion. XSD has an expense ratio of 0.35% and SMH charges 0.35%.
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.
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iShares Semiconductor ETF (SOXX): ETF Research Reports
Intel Corporation (INTC): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
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