The Key to AI Tech

Artificial intelligence is the hot topic of 2023.

Semiconductors are essential to AI technology. They’re the hardware upon which AI algorithms and software operate. 

That’s most likely why there’s been a sudden surge in semiconductor interest from financial pros, according to the latest search data from Trackstar, our proprietary sentiment indicator. 

But instead of an individual stock, they’ve set their eyes on the iShares Semiconductor ETF (SOXX), which holds a basket of some of the most compelling semiconductor stocks on the market.   

Key Facts About SOXX

• Net assets: $7.2 billion
• Holdings: 30
• 12-month trailing yield: 1.07%
• Inception: July 10, 2001
• Expense ratio: 0.35% 

The ETF seeks to track the investment results of an index of all U.S.-listed equities in the semiconductor sector. 

It offers investors targeted access to domestic semiconductor stocks.

The top 10 assets in the portfolio make up 57.7% of its weight: 

Source: BlackRock

Of SOXX’s 30 positions, 80.7% are semiconductor companies and 19.1% are semiconductor equipment companies. The remaining .18% is cash and/or derivatives. 

Performance

Over the last five years, SOXX’s cumulative return has been 117.3%, including dividends. Since its inception, it has returned 535.1%.  

Source: BlackRock

Competition

Investors seeking a targeted investment in semiconductors via ETF have several options. Some of the more notable, according to Trackstar search data, are:

• Invesco Dynamic Semiconductors ETF (PSI): 32 positions, with the top 10 making up 45.9% of the portfolio 
• SPDR S&P Semiconductor ETF (XSD): 40 positions, with the top 10 making up 32.9% of the portfolio 
• VanEck Semiconductor ETF (SMH): 26 positions, with the top 10 making up 59.9% of the portfolio
• Direxion Daily Semiconductor Bull 3X Shares (SOXL): 45 positions, with the top 10 making up 63.3% of the portfolio 

SOXL is a leveraged ETF, which makes it unsuitable for investing. It’s better for trading. 

SMH includes non-U.S. semiconductor companies like Taiwan Semiconductors (TSM). 

XSD has a broader portfolio. Its second-largest holding is First Solar (FSLR). 

PSI is the most similar to SOXX.  

Fees 

• SOXX: 0.35%
• PSI: 0.55%
• XSD: 0.35%
• SMH: 0.35% 
• SOXL: 0.94%

Annual Dividend Yield

• SOXX: 1.06%
• PSI: 0.52%
• XSD: 0.37%
• SMH: 0.99% 
• SOXL: 0.70%

Five-Year Cumulative Performance

• SOXX: 121.4%
• PSI: 116.0%
• XSD: 172.9%
• SMH: 124.3% 
• SOXL: 29.1%

Our Opinion 8/10

Despite all the economic uncertainty, semiconductors should remain in high demand due to their main uses in areas such as IT, consumer electronics, automotive, healthcare, aerospace and defense, energy, and emerging technologies like AI and machine learning. 

Investing in SOXX is a great way to gain exposure to the semiconductor space.