Understanding the Invesco PHLX Semiconductor ETF (SOXQ)

The Invesco PHLX Semiconductor ETF (ticker: SOXQ) is designed to track the performance of companies involved in the semiconductor industry. Semiconductors are the tiny computer chips found in almost all modern electronics.

What this ETF is trying to do

SOXQ focuses on the semiconductor sector. It invests in companies that design, make, and sell the chips used in everything from smartphones to supercomputers. By holding a group of these companies, the ETF provides exposure to the semiconductor industry rather than just one single company.

What the numbers show

The data shows significant growth in the share price over various timeframes.

• Year-to-Date (YTD): The price return is approximately 86.53%.

• One-Year: The price return was approximately 95.11%.

• Three-Year: The price return was approximately 279.81%.

It is important to distinguish between price return and total return. Price return only measures how much the share price changed. Total return includes both the price change and any cash distributions paid out to investors. For SOXQ, the total returns are slightly higher than the price returns:

• YTD Total Return: Approximately 87.04%.

• One-Year Total Return: Approximately 95.85%.

• Three-Year Total Return: Approximately 286.71%.

To visualize the growth, an investor's share price would have grown from an estimated price of $53.32 one year ago to the current price of $104.03.

Income and distribution explanation

SOXQ provides a small amount of cash income through distributions. The distribution yield is approximately 0.28%. This means the cash paid out is quite low relative to the share price. The fund usually pays these distributions quarterly, with 4 payouts recorded over the last 12 months.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While some investors worry that high payouts can cause a fund's value to shrink, SOXQ does not show this pattern. The erosion-risk score is 100, which is labeled as "No price erosion detected," and the erosion severity is rated as "good." There is no severe erosion-risk flag for this ETF.

Top Holdings

The following are the top holdings in the portfolio (note that this is a partial list):

• NVIDIA CORP: 11.30%

• BROADCOM INC: 8.77%

• MICRON TECHNOLOGY INC: 8.13%

• INTEL CORP: 4.74%

• ADVANCED MICRO DEVICES INC: 4.72%

• MARVELL TECHNOLOGY INC: 4.55%

• KLA CORP: 4.10%

• APPLIED MATERIALS INC: 4.09%

• TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD ADR: 4.03%

• ANALOG DEVICES INC: 4.02%

*Holdings are subject to change over time.*

Pros

• Strong Growth: The ETF has shown very high price returns over the last one and three years.

• Sector Focus: It provides concentrated exposure to the semiconductor industry.

Cons

• Low Yield: The distribution yield is very low, so it may not be suitable for those seeking high regular income.

Beginner takeaway

SOXQ is an ETF that focuses on the chip-making industry. It has experienced significant price growth recently, but it offers very little in the way of cash distributions (income).