Las Vegas, Nevada – As the semiconductor industry continues to thrive, investors are presented with a choice between two major ETFs: VanEck’s Semiconductor ETF (SMH) and iShares’ Semiconductor ETF (SOXX). Both ETFs boast significant assets under management and share the same expense ratio, but their methodologies and performance differ significantly.
SMH, managed by VanEck, has garnered attention for its outperformance compared to SOXX, with a year-to-date surge of 33% versus SOXX’s 19% increase. This trend of SMH outperforming SOXX is consistent over multiple timeframes, making it a more attractive option for investors seeking exposure to the semiconductor industry.
One of the key differences between SMH and SOXX lies in their selection methodologies. While SOXX mirrors the NYSE Semiconductor Index with specific capping limits, SMH tracks the MVIS US Listed Semiconductor 25 Index, allowing for a more concentrated exposure to leading semiconductor companies without the restrictive capping seen in SOXX.
Another factor to consider is dividend growth potential. While FTXL leads in terms of dividend growth among semiconductor ETFs, SMH is not far behind. With a 3-year CAGR of 11.55%, SMH presents an upward trend in dividend growth, making it an appealing choice for investors looking for income potential in addition to capital appreciation.
Furthermore, the holdings of SMH and SOXX overlap significantly, with 88% of SMH holdings also present in SOXX. However, SMH tends to overweight companies like Nvidia and Taiwan Semiconductor, which have shown exceptional performance and global significance in the semiconductor industry.
In conclusion, SMH offers a compelling opportunity for investors to access the dynamic semiconductor industry with the potential for dividend growth. Its performance, methodology, and holdings make it a preferable choice over SOXX, especially for those looking to capitalize on market corrections. Investors seeking exposure to the semiconductor sector may find SMH to be a more promising investment option in the current market landscape.
