SOXX vs. XLK: How Semiconductor Stocks Compare to Broader Tech Industry Diversification
Key Points
XLK offers a lower expense ratio and offers a marginally higher dividend yield than SOXX.
While SOXX has delivered significantly higher one- and five-year total returns than XLK, it's also experienced a deeper max drawdown.
XLK provides broader diversification with 73 holdings across various tech sub-sectors, whereas SOXX concentrates its 30 holdings exclusively in semiconductors.
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The State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) and the iShares Semiconductor ETF (NASDAQ:SOXX) are both heavy hitters in the technology space, but they offer vastly different degrees of specialization.
While one casts a wide net across the S&P 500 technology holdings, the other homes in on the specific hardware components powering modern computing.
Understanding the trade-off between the stability of diversification and the potential of high-octane industry concentration is essential for any growth-oriented portfolio.
Snapshot (cost & size)
| Metric | SOXX | XLK |
|---|---|---|
| Issuer | iShares | State Street |
| Expense ratio | 0.34% | 0.08% |
| 1-yr return (as of May 27, 2026) | 183.2% | 64.2% |
| Dividend yield | 0.36% | 0.48% |
| Beta (5Y monthly) | 2.06 | 1.26 |
| Assets under management (AUM) | $29.6 billion | $103.3 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
XLK is significantly more affordable for investors, with an expense ratio of 0.08% compared to 0.34% for SOXX. The State Street fund also provides a slightly higher payout, which may appeal to investors seeking greater passive dividend income.
Performance & risk comparison
| Metric | SOXX | XLK |
|---|---|---|
| Max drawdown (5 yr) | -45.8% | -33.6% |
| Growth of $1,000 over 5 years (total return) | $4,172 | $2,774 |
What's inside
XLK holds 73 positions and tracks a broad index of technology companies within the S&P 500, including software, IT services, and hardware sub-sectors. Its largest positions include Nvidia, Apple, and Microsoft.
The fund is 100% focused on technology and has a trailing-12-month dividend of $0.76 per share. With more than $100 billion in assets under management (AUM), it provides deep liquidity for institutional and retail investors alike.
In contrast, SOXX is a more concentrated vehicle with 30 holdings. Rather than covering the whole tech sector, it focuses strictly on the semiconductor industry. Its largest positions include Micron Technology, Advanced Micro Devices, and Broadcom. Like XLK, its portfolio is 100% technology-based, but it has paid $1.67 per share in dividends over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
While SOXX and XLK both exclusively cover tech stocks, their vastly different approaches may appeal to different investor goals.
XLK focuses on the broader tech sector, offering a larger portfolio of stocks and greater diversification. This can help limit risk during periods of volatility, as evidenced by its lower beta and milder max drawdown over the last five years.
However, broader diversification can sometimes be a double-edged sword. While XLK may be the less risky of the two ETFs, it’s also significantly underperformed SOXX in both one- and five-year total returns.
Because SOXX is focused on semiconductor stocks, it’s well-positioned to thrive if the artificial intelligence (AI) industry continues to grow. But if AI stocks take a tumble, SOXX could be hit much harder than XLK.
Where you choose to buy will depend mostly on your goals and risk tolerance. Investors who are comfortable taking on more risk in exchange for greater earning potential may be more willing to take a bet on SOXX, while those who prefer a more diversified approach to tech stocks might prefer XLK.
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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Broadcom, Micron Technology, Microsoft, Nvidia, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.
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