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Is iShares Semiconductor ETF (SOXX) a Strong ETF Right Now?
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The iShares Semiconductor ETF (SOXX - Free Report) was launched on 07/10/2001, and is a smart beta exchange traded fund designed to offer broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Blackrock, SOXX has amassed assets over $8.77 billion, making it one of the largest ETFs in the Technology ETFs. This particular fund, before fees and expenses, seeks to match the performance of the PHLX SOX Semiconductor Sector Index.
The ICE Semiconductor Index measures the performance of U.S. traded securities of companies engaged in the semiconductor business.
Cost & Other Expenses
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 SOXX are 0.35%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.93%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Taking into account individual holdings, Advanced Micro Devices Inc (AMD - Free Report) accounts for about 8.58% of the fund's total assets, followed by Broadcom Inc (AVGO - Free Report) and Nvidia Corp (NVDA - Free Report) .
SOXX's top 10 holdings account for about 57.72% of its total assets under management.
Performance and Risk
So far this year, SOXX return is roughly 38.30%, and is up about 40.41% in the last one year (as of 11/09/2023). During this past 52-week period, the fund has traded between $337.53 and $535.64.
SOXX has a beta of 1.32 and standard deviation of 34.44% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 35 holdings, it has more concentrated exposure than peers.
Alternatives
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 $1.25 billion in assets, VanEck Semiconductor ETF has $10.08 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.
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Is iShares Semiconductor ETF (SOXX) a Strong ETF Right Now?
The iShares Semiconductor ETF (SOXX - Free Report) was launched on 07/10/2001, and is a smart beta exchange traded fund designed to offer broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Blackrock, SOXX has amassed assets over $8.77 billion, making it one of the largest ETFs in the Technology ETFs. This particular fund, before fees and expenses, seeks to match the performance of the PHLX SOX Semiconductor Sector Index.
The ICE Semiconductor Index measures the performance of U.S. traded securities of companies engaged in the semiconductor business.
Cost & Other Expenses
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 SOXX are 0.35%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.93%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Taking into account individual holdings, Advanced Micro Devices Inc (AMD - Free Report) accounts for about 8.58% of the fund's total assets, followed by Broadcom Inc (AVGO - Free Report) and Nvidia Corp (NVDA - Free Report) .
SOXX's top 10 holdings account for about 57.72% of its total assets under management.
Performance and Risk
So far this year, SOXX return is roughly 38.30%, and is up about 40.41% in the last one year (as of 11/09/2023). During this past 52-week period, the fund has traded between $337.53 and $535.64.
SOXX has a beta of 1.32 and standard deviation of 34.44% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 35 holdings, it has more concentrated exposure than peers.
Alternatives
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 $1.25 billion in assets, VanEck Semiconductor ETF has $10.08 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.