VGT vs. SOXX: How Does Broad Tech Diversification Compare to Semiconductor Exposure for Investors?

Core Insights - The Vanguard Information Technology ETF (VGT) provides broader sector exposure with over 300 tech-related holdings, while the iShares Semiconductor ETF (SOXX) focuses on 30 leading U.S. semiconductor stocks, appealing to different investment strategies [2][10] Cost & Size - SOXX has an expense ratio of 0.34% and AUM of $16.7 billion, while VGT has a lower expense ratio of 0.09% and AUM of $130.0 billion [3] - The one-year return for SOXX is 41.81%, compared to VGT's 16.10%, and SOXX offers a higher dividend yield of 0.55% versus VGT's 0.41% [3][4] Performance & Risk Comparison - SOXX has a max drawdown of -45.75% over five years, while VGT's max drawdown is -35.08% [5] - The growth of $1,000 over five years is $2,346 for SOXX and $2,154 for VGT, indicating stronger performance for SOXX despite its higher risk [5] Holdings Overview - VGT includes 322 stocks with top holdings in Nvidia, Apple, and Microsoft, reflecting long-term stability over its nearly 22-year history [6] - SOXX is concentrated on 30 companies, heavily weighted towards Broadcom, Advanced Micro Devices, and Nvidia, making it suitable for investors seeking precise exposure to U.S. chipmakers [7] Investment Implications - VGT's broader portfolio and lower expense ratio may appeal to cost-conscious investors, while SOXX's higher one-year return and dividend yield may attract income-driven investors [4][9] - Greater diversification in VGT results in less price volatility, with a lower beta compared to SOXX, which may provide an advantage in a declining market [11]