"Can investors get technology-sector exposure with exchange traded funds (ETFs) that track the S&P 500 or SPX? Sure, but many people are choosing the iShares Semiconductor ETF ( NASDAQ:SOXX), which doesn't track the S&P 500, to give an extra tech-fueled boost to their portfolios in the 2020s. In some respects, the SOXX ETF doesn't match up to popular S&P tracking funds like the SPDR S&P 500 ETF Trust ( NYSEARCA:SPY) and the Vanguard S&P 500 ETF ( NYSEARCA:VOO)."
"To understand the main difference between the iShares Semiconductor ETF and a fund that tracks the S&P 500, such as SPY or VOO, we can look at SOXX's list of holdings. As we'll discover, this particular iShares fund focuses on famous names in the semiconductor space. Granted, the SPY ETF includes semiconductor-sector giants like NVIDIA ( NASDAQ:NVDA), Advanced Micro Devices ( NASDAQ:AMD), and Broadcom ( NASDAQ:AVGO). The VOO ETF's holdings list also includes these semiconductor stocks."
SOXX is an ETF concentrated in the semiconductor sector with only 35 holdings, providing heavy exposure to firms such as NVIDIA, AMD, and Broadcom. SOXX charges higher management fees and offers a lower dividend yield than broad S&P 500 tracking funds like SPY and VOO. SPY and VOO each hold roughly 500 stocks and include non-technology companies, offering broader diversification and steadier income characteristics. SOXX has produced stronger long-term share-price performance, creating a trade-off between enhanced growth potential and greater concentration risk compared with diversified S&P 500 ETFs.
Read at 24/7 Wall St.
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