XLK Offers Broader Tech Diversification, While SOXX Targets Semiconductor Stocks. Which Is the Better Investment?

2 days ago 6

Katie Brockman, The Motley Fool

Sat, January 3, 2026 astatine 12:50 PM CST 5 min read

XLK is importantly cheaper to ain and acold larger than SOXX, but its caller returns person lagged the semiconductor-focused fund.
SOXX is much volatile and suffered a deeper five-year drawdown, reflecting its constrictive chip-sector tilt.
XLK offers broader tech exposure, with mega-cap holdings similar Nvidia, Apple, and Microsoft dominating its portfolio.
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Both the iShares Semiconductor ETF (NASDAQ:SOXX) and the State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) purpose to seizure U.S. exertion growth, but their approaches differ: SOXX zeroes successful connected the semiconductor segment, portion XLK provides diversified vulnerability crossed the full exertion sector.

For investors comparing these two, the prime comes down to cost, hazard profile, and the breadth of tech vulnerability each money delivers.

Metric

SOXX

XLK

Issuer	iShares	SPDR
Expense ratio	0.34%	0.08%
1-yr instrumentality (as of Jan. 2, 2026)	45.63%	24.13%
Dividend yield	0.55%	0.53%
AUM	$17 billion	$93 billion
Beta (5Y monthly)	1.77	1.26

Beta measures terms volatility comparative to the S&P 500. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

XLK offers a substantially little disbursal ratio than SOXX, which could entreaty to investors looking to minimize fees. Both funds connection akin dividend yields, truthful income-focused investors won't announcement a meaningful quality betwixt the 2 successful this regard.

Metric

SOXX

XLK

Growth of $1,000 implicit 5 years	$2,483	$2,220
Max drawdown (5Y)	-45.75%	-33.56%

Over the past 5 years, SOXX delivered stronger maturation than XLK, but it besides experienced a overmuch deeper maximum drawdown -- reflecting its higher hazard and narrower assemblage absorption compared to XLK’s broader tech approach.

XLK tracks the show of the Technology Select Sector Index, offering vulnerability to 70 starring U.S. exertion stocks crossed hardware, software, IT services, and semiconductors.

Its apical holdings -- Nvidia, Apple, and Microsoft -- collectively marque up astir 40% of assets, highlighting a mega-cap tilt. With 27 years of past and implicit $90 cardinal successful assets nether absorption (AUM), XLK is among the largest and astir liquid assemblage ETFs available.

SOXX, by contrast, is laser-focused connected the semiconductor industry, holding conscionable 30 companies. Its largest positions see Nvidia, Advanced Micro Devices, and Micron Technology.

For much guidance connected ETF investing, cheque retired the afloat usher astatine this link.

XLK and SOXX are some tech-centric funds, but they disagree successful their approaches and goals.