Chipping Away At Semiconductor ETFs

October 10, 2019

The semiconductor industry is crucial to technological advances and is one of the driving forces behind a host of other industries.

There are currently four semiconductor ETFs targeting U.S. stocks, and although the iShares PHLX Semiconductor ETF (SOXX) seems to be blowing away the competition and is ranked as the best choice by FactSet in its market segment, there are subtle differences some investors should consider.

 

Size & Cost

SOXX weighs in with assets under management (AUM) of almost $1.8 billion, more than five times the size of its next largest competitor, the SPDR S&P Semiconductor ETF (XSD), with $336.4 million in AUM. SOXX is also the oldest fund in the category, with its inception dating back to 2001.

However, XSD is cheaper, charging an expense ratio of 0.35% compared with SOXX’s 0.46%, making it the lowest-cost fund in the group.

The Invesco Dynamic Semiconductors ETF (PSI) is a $178 million fund and charges an expense ratio of 0.58%, while the smallest fund in the group, the First Trust Nasdaq Semiconductor ETF (FTXL), with $30.9 million in AUM, is also the most expensive, at 0.60%.

 

Ticker Fund Expense Ratio AUM AD$V ADSV Spread # Of Holdings Inception Flows ($M)
SOXX iShares PHLX Semiconductors ETF 0.46% $1.77B $110.45M 535,124 0.04% 32 10/7/2001 26.19
XSD SPDR S&P Semiconductor ETF 0.35% $336.39M $10.69M 119,591 0.06% 36 31/1/2006 384.09
PSI Invesco Dynamic Semiconductors ETF 0.58% $177.96M $1.81M 31,741 0.07% 31 23/6/2005 -24.52
FTXL First Trust Nasdaq Semiconductor ETF 0.60% $30.87M $371.23K 10,681 0.57% 30 20/9/2016 5.84

Source: FactSet, as of 10/4/2019

 

Holdings & Methodology

All four ETFs are very similar in many ways, holding 30-36 securities each, with a total of 11 securities held in common across all four funds—that’s roughly a third of each fund’s components. Still, there’s a lot of variance in the total weight of those 11 components in each fund, and that’s likely due to differences in methodology.

SOXX’s 32 holdings are weighted by modified market capitalization. XSD’s 36 holdings are selected based on market capitalization and are equally weighted, while PSI implements a multifactor quantitative approach to select and weight its 31 holdings. FTXL’s index methodology selects its 30 components based on liquidity, and weights them based on value, volatility and growth factors.

NVIDIA is SOXX’s largest holding, with a weighting of 8.42%, with Intel and Texas Instruments in the second and third spots, at 8.21% and 8.09%, respectively. All three of those securities are also held by the other three funds in the group, but at often very different weights. For example, FTXL gives NVIDIA only a 1.67% weighting, and XSD weights Intel at 3.18%.

 

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

 

The 11 components held by all four funds as a group also have very different aggregated weights in the respective ETFs, with those securities representing nearly 55% of SOXX’s total weight and less than 35% of XSD’s total weight.

For someone looking for semiconductor exposure, the individual security selection and weighting in such narrow-based funds could be very important if they have particular names they are hoping to see in a fund, especially when it comes to a company like NVIDIA.

 

Company SOXX XSD PSI FTXL
NVIDIA Corporation 8.42% 3.28% 5.27% 1.67%
Intel Corporation 8.21% 3.18% 5.18% 8.08%
Texas Instruments Incorporated 8.09% 3.29% 5.06% 7.91%
QUALCOMM Incorporated 7.57% 3.24% 4.81% 1.53%
Broadcom Inc. 7.55% 3.18% 4.70% 2.50%
Analog Devices, Inc. 3.92% 3.18% 4.94% 3.87%
Micron Technology, Inc. 3.73% 2.89% 4.72% 3.70%
Xilinx, Inc. 3.46% 2.93% 2.37% 1.39%
Maxim Integrated Products, Inc. 2.55% 3.17% 2.78% 1.62%
Silicon Laboratories Inc. 0.77% 3.16% 2.61% 1.55%
Cirrus Logic, Inc. 0.51% 3.22% 2.65% 3.83%
  54.78% 34.72% 45.09% 37.65%

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