Invesco Chip ETF Outpaces SMH in Recent Periods, but VanEck Wins Long Term
The Invesco PHLX Semiconductor ETF returned 67.69% over the past year, compared with 61.32% for the VanEck Semiconductor ETF. SOXQ also leads year-to-date at 60.75% versus 53.31%, but SMH has a much stronger five-year return of 333.41% versus 256.91%. Switching between the funds in a taxable account may trigger capital gains, and both remain concentrated in the same sector, so a swap does not reduce chip-cycle risk.
SOXQ, the Invesco PHLX Semiconductor ETF, has a shorter history, beginning in June 2021, so no ten-year comparison with SMH exists. Its recent edge is 6.37 percentage points over one year and 7.44 points year-to-date, while VanEck’s fund leads by 76.5 points across five years.
The funds follow different indexes: SMH tracks the MVIS US Listed Semiconductor 25 Index, while SOXQ tracks the PHLX Semiconductor Sector Index, a modified market-cap-weighted measure. Both hold only chip-related companies, and switching in a taxable account may realize capital gains.
Retail investors, taxable-account holders, and retirement savers comparing chip ETFs could be affected by small return gaps and tax consequences. A switch may improve recent performance but could reduce after-tax outcomes if capital gains are realized. Because both funds are concentrated in semiconductors, their holders may face similar volatility during industry downturns. The attention given to these funds may also influence how individual investors allocate savings toward a single sector, potentially increasing portfolio risk.