If You'd Parked $1,000 in the iShares Semiconductor ETF 5 Years Ago, Here's What You'd Have Today
Key Points
The iShares Semiconductor ETF (SOXX) is up more than four times higher than the S&P 500 in five years.
SOXX contains companies from all phases of the semiconductor ecosystem.
- 10 stocks we like better than iShares Trust - iShares Semiconductor ETF ›
One of the more explosive exchange-traded funds (ETFs) in the market over the past few years has been the iShares Semiconductor ETF (NASDAQ: SOXX). It's not as diversified as other tech ETFs, but that has worked out in its favor.
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In the past five years, the SOXX ETF is up 318%, meaning a $1,000 investment made back then would be worth $4,181 today (with dividends reinvested, as of July 2). For perspective, if you put that same $1,000 into an S&P 500 ETF, it would have risen 86% and pushed your investment to $1,862 (total return).
Semiconductors may sound complex, but they're essentially the brains of modern technology. You have companies that design them, provide the manufacturing equipment needed to make them, manufacture them, and put them to use. SOXX provides exposure to companies across the semiconductor ecosystem.
It contains 30 companies, including some tech heavyweights, such as Nvidia, Taiwan Semiconductor Manufacturing, Broadcom, Micron, Advanced Micro Devices, and Intel. These have been among the market's highest performers over the past five years, which is largely why SOXX has been so successful during that time.
I would be surprised if SOXX continues at its current growth rate (it's up 88% this year), but I wouldn't be surprised if it continues to outperform the market over the next couple of years. It has a place in portfolios; just don't use it as a tech ETF replacement.
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Stefon Walters has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Intel, Micron Technology, Nvidia, Taiwan Semiconductor Manufacturing, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.
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