Both iShares Semiconductor ETF (NASDAQ:SOXX) and State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) They aim to give investors access to the US technology sector, but they differ in scope and risk. SOXX focuses on semiconductor companies, making them more concentrated, while XLK casts a broader net on software, hardware and IT services. This comparison highlights which fund may be most attractive based on the desired balance of sector focus, costs and performance history.
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Metric
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SOXX
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XLK
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Editor
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IShares
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SPDR
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Expense ratio
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0.34%
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0.08%
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1-year declaration (as of January 2, 2026)
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42.0%
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23.2%
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Dividend yield
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0.55%
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0.62%
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Beta
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1.51
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1.21
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AUM
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$17.7 billion
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$93.4 billion
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Beta measures price volatility relative to the S&P 500; Beta is calculated from five-year weekly returns. The 1-year return represents the total return over the past 12 months.
XLK is significantly more affordable, charging just 0.08% in annual expenses compared to SOXX’s 0.34%, and its yield is slightly lower at 0.55% vs. SOXX’s 0.62%, a modest difference for income-focused investors.
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Metric
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SOXX
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XLK
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Maximum reduction (5 years)
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(45.76%)
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(33.55%)
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$1,000 growth in 5 years
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$2,599
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$2,346
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XLK owns around 70 stocks and has been around for 27 years, tracking the Technology Select Sector Index. Its portfolio covers almost the entire technology landscape, with notable positions in NVIDIA (NASDAQ: NVDA) at 13.72%, Apple (NASDAQ:AAPL) at 12.82%, and microsoft (NASDAQ:MSFT) at 11.17%. This broad approach means exposure to hardware, software, IT services and communications equipment, not just semiconductors.
SOXX, by comparison, is made up of 30 positions entirely within the technology sector, but with a strong focus on semiconductors. His largest holdings include Advanced Microdevices (NASDAQ:AMD), Broadcom (NASDAQ:AVGO)and Nvidia, which together represent a significant portion of the fund’s assets. This sector tilt makes SOXX more sensitive to chip industry cycles, while XLK spreads risk across more technology sub-industries.
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The iShares Semiconductor ETF (SOXX) is a more specialized, higher-fee fund that focuses on semiconductors, while the State Street Technology Select Sector SPDR ETF (XLK) offers broader technology exposure at a much lower cost and with greater scale.
First, let’s focus on SOXX, which has generated superior returns over the past five years. The fund has generated a five-year compound annual growth rate (CAGR) of 21.1%, thanks to excellent returns from top holdings such as Nvidia and Broadcom. However, those fantastic results come with some trade-offs. Notably, SOXX has seen several sharp pullbacks, the worst of which caused the fund to lose more than 45% of its value in 2022. Additionally, SOXX has an expense ratio of 0.34%. While this is not too expensive for an ETF, cheaper options can be found.
Now let’s move on to XLK. This fund is broader than SOXX and focuses on the entire technology sector, rather than just the semiconductor industry. It has more than twice as many shares (70) as SOXX (30) and has seen greater stability over the past five years, with a maximum drop of 33.5%. Additionally, investors pay fewer fees, due to the ETF’s expense ratio of 0.08%. In terms of performance, XLK has generated a CAGR of 18.6% over five years. While it is well above the S&P 500 (14.8%), it lags SOXX’s 21.1% CAGR.
In summary, there are many similarities between these two funds, although some key differences stand out. More conservative investors may be better prepared for XLK, due to its cheaper fees and lower historical drawdowns. Meanwhile, more aggressive investors may find SOXX’s higher yields and greater sector concentration irresistible.
ETFs: exchange-traded fund; a basket of securities traded on an exchange like a stock.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its investors.
Dividend yield: Annual dividends paid by a fund, expressed as a percentage of its share price.
Beta: A measure of a fund’s volatility relative to the broader market, usually the S&P 500.
AUM: Assets under management; the total market value of the assets managed by a fund.
Maximum reduction: The largest loss observed from a fund’s peak value to its lowest point over a period.
Total profitability: The price of the investment changes plus all dividends and distributions, assuming those payments are reinvested.
Sector inclination: When a fund has a higher weighting in a particular industry or sector compared to the overall market.
Subindustries: Distinct segments within a broader industry, such as software or semiconductors within technology.
Editor: The company or entity that creates and manages an ETF or mutual fund.
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Jake Lerch has positions at Nvidia. The Motley Fool holds and recommends Advanced Micro Devices, Apple, Microsoft, Nvidia and iShares Trust – iShares Semiconductor ETF. The Motley Fool recommends Broadcom and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.
SOXX made bigger profits than XLK, but with greater risk and volatility originally published by The Motley Fool
