SOXX Performance Highlight: Is Smart Beta ETF Right for You?

The iShares Semiconductor ETF (SOXX) faces challenges with -7.78% YTD losses and a volatile market. Investors should assess underlying holdings like Nvidia and Qualcomm to navigate the segment effectively.

Date: 28-03-2025

AI Rating: 5

The recent analysis indicates that the iShares Semiconductor ETF (SOXX) is experiencing significant performance challenges, notably with a year-to-date loss of about -7.78% and a decline of -10.29% over the past 12 months. Such decline may considerably impact investor sentiment and stock prices of underlying components such as Nvidia Corp (NVDA) and Qualcomm Inc (QCOM).

Performance and Risk: With a beta of 1.33 and a standard deviation of 34.80%, SOXX represents a high-risk investment option. The ETF's concentrated holding structure could amplify reactions to market volatility, negatively affecting stocks within its portfolio.

Fundamentals: Since the ETF tracks the PHLX SOX Semiconductor Sector Index, its future performance will correlate closely with profitability and growth metrics of its major holdings. For instance, Broadcom (AVGO), Nvidia (NVDA), and Qualcomm (QCOM) are significant contributors to SOXX. Given their current standing, investors should closely monitor earnings reports for these companies, focusing on metrics such as revenue growth and earnings per share (EPS) to gauge potential recovery or deterioration in performance.

The expense ratio of 0.35% is competitive, assuring minimal additional financial burden on investors compared to other products in the space. This low cost structure is particularly appealing during market downturns.

In summary, while the iShares Semiconductor ETF offers unique non-cap weighted strategies that may benefit long-term focused investors, the current challenges in performance and volatility raise caution for those with shorter-term investment horizons.

Stocks: AVGO NVDA QCOM