Semiconductors
Published by Radif Partners · Updated
NVIDIA, ASML, Broadcom, invest in the chips powering AI and computing
This page compares 4 funds in the Semiconductors category, with ongoing charges from 0.34% to 0.76% and a median of 0.35%. The gap between the cheapest and the dearest is worth roughly €420 over ten years on €10,000 invested: for a comparable index, that is the most reliable difference between two funds, because it rests on no assumption about markets. 2 of the 4 funds are accumulating and 3 replicate their index by holding its securities, the others using a swap. The largest fund in the list is SOXX, which matters less for returns than for the risk of closure: a fund that stays small usually ends up merged. Past performance is not used to rank this list: over the horizons published it says more about the index being tracked than about how the fund is run.
4
0.45%
+104.2%
0.34%
+156.1%
iShares Semiconductor ETF
Direxion Daily Semiconductor Bull 3X Shares
VanEck Semiconductor UCITS ETF
L&G Global Semiconductors UCITS ETF
The most cyclical sector on the market, and the most concentrated
Semiconductors combine three traits few sectors share. The cycle is brutal: demand turns faster than factories can adapt, and a full cycle, from shortage to glut, typically runs two to three years with share-price swings of fifty per cent. Concentration is extreme: a single Taiwanese foundry makes most of the world's advanced chips, and three companies hold nearly all of the lithography equipment market. Finally the geopolitical risk is direct, since production sits physically in the most contested area of Asia.
For a fund this shows up as weight caps that bite. A capitalisation-weighted index would put more than a quarter in one holding, which UCITS rules forbid beyond set concentration limits: sector indices therefore apply caps, often eight or ten per cent, rebalanced quarterly. That creates a mechanical, recurring gap against the performance of the sector's biggest names, upwards as well as downwards. Reading it is essential before comparing a fund's return with that of the company you happen to have heard about.
What the funds in this category show
Where the money actually sits
The category holds 4 funds and 86.8B in combined assets, and those assets are not spread evenly. iShares Semiconductor ETF (SOXX), run by iShares, holds 48.4B on its own, and the three largest, iShares Semiconductor ETF (SOXX), Direxion Daily Semiconductor Bull 3X Shares (SOXL) and VanEck Semiconductor UCITS ETF (SMH), account for 92.4 % of the total. At the other end, L&G Global Semiconductors UCITS ETF (SEMI) manages only 6.6B. Size is no guarantee of quality, but it decides two very concrete things: the spread between buying and selling price you pay on every order, and the odds that the fund still exists in ten years.
The fee gap, in money
Ongoing charges run from 0.34 % for L&G Global Semiconductors UCITS ETF (SEMI) to 0.76 % for Direxion Daily Semiconductor Bull 3X Shares (SOXL), a gap of 0.42 points, against a category average of 0.45 %. On £10,000 held for ten years that gap is roughly 420 in extra charges, before counting the return that money would itself have earned. It is the one variable in the comparison known in advance: past performance does not repeat, fees repeat every year.
Two funds in one category do not hold the same basket
The 4 funds listed track 4 different indices, among them ICE Semiconductor, ICE Semiconductor 3x Leveraged, MarketVector US Listed Semiconductor 10% Capped and ROBO Global Semiconductor. The largest tracks ICE Semiconductor. That spread is why two funds filed under the same theme can differ by several points over a year: they hold different securities, weight them differently and rebalance on different dates. Each fund page names its index, and that is where a serious comparison starts.
Replication and domicile
3 funds hold the constituents of their index directly, 1 use a swap, including Direxion Daily Semiconductor Bull 3X Shares (SOXL) from Direxion. Synthetic replication often tracks more closely and reaches markets that are hard to hold directly, at the price of a counterparty risk that is regulated but real. Physical replication is easier to understand and allows securities lending, which earns the fund income and adds its own risk.
2 of the 4 funds are domiciled in US, the rest in IE. Domicile sets the withholding tax the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return, and it also sets your own tax treatment depending on where you live.
Accumulate or take the income
2 funds accumulate dividends, 2 pay them out. The largest accumulating share class is VanEck Semiconductor UCITS ETF (SMH), the largest distributing one iShares Semiconductor ETF (SOXX). The choice is not about yield, both versions of the same index return the same before tax, but about tax and discipline: the accumulating class reinvests with no cost and no decision, the distributing class pays income that is taxable in the year it arrives.
Age and critical size
The oldest fund in the category, iShares Semiconductor ETF (SOXX), launched on 2001-07-10, giving 25 years of history, and the newest, L&G Global Semiconductors UCITS ETF (SEMI), on 2022-07-07. A long record shows how the fund behaved in a fall, which no one-year number can. A fund launched two years ago has lived through a single market regime.
None of the 4 funds manages under 100 million, the smallest being L&G Global Semiconductors UCITS ETF (SEMI). The category is therefore clear of closure risk for want of size, the risk that forces a sale on the issuer's timetable rather than the holder's.
Frequently asked questions
Why invest in semiconductor ETFs?
Semiconductors are essential components in AI, smartphones, cars, and data centers. The sector benefits from secular growth trends including AI adoption, cloud computing, and electrification. Check the figure in the key information document of the exact share class your broker offers, since two classes of the same fund can differ on charges and on distribution policy.
Which companies are in semiconductor ETFs?
Top holdings typically include NVIDIA, ASML, Broadcom, AMD, Qualcomm, Texas Instruments, and Applied Materials. The mix varies between U.S.-focused and global semiconductor ETFs. What matters more than the ranking is whether the underlying index suits your horizon and your tolerance for a fall of thirty per cent, which no score can decide for you.
How volatile are semiconductor ETFs?
Semiconductor ETFs are highly cyclical with annualized volatility of 25-35%. The sector can swing dramatically based on chip demand cycles, AI investment trends, and geopolitical factors. Past performance over these horizons says more about the index than about the fund, which is why the comparison here weighs cost, size and tracking quality instead.
Are semiconductor ETFs good for long-term investing?
The semiconductor industry has strong long-term tailwinds from AI, IoT, and electrification. However, due to high volatility, it is best suited as a satellite position for investors with high risk tolerance. Over a ten-year horizon the ongoing charge weighs more than any difference in past performance: 0.20% against 0.50% on €10,000 is about €300, compounded.