By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panelists agree that the choice between FTEC and SOXX depends on risk tolerance and cycle dynamics. FTEC offers lower fees, broader exposure, and a potential valuation floor, while SOXX provides higher growth but with increased risk and volatility.
Risk: The high concentration and cyclical nature of SOXX, which could lead to catastrophic drawdowns if the AI capex cycle hits a wall.
Opportunity: SOXX's potential for higher growth if the semiconductor cycle persists.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Fidelity MSCI Information Technology Index ETF offers a much lower expense ratio than iShares Semiconductor ETF
iShares Semiconductor ETF has delivered significantly higher total returns over the last year, but experiences greater price volatility
Fidelity MSCI Information Technology Index ETF provides broader diversification with 286 holdings compared to the 30 companies held by iShares Semiconductor ETF
Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) offers low-cost, broad tech exposure, while iShares Semiconductor ETF (NASDAQ:SOXX) targets a concentrated, high-volatility bet on the semiconductor industry.
Investors seeking exposure to the technology sector often choose between broad market funds and specialized industry vehicles. The choice between a diversified information technology fund and a concentrated semiconductor fund involves weighing lower costs and broader reach against the potential for higher volatility and significant industry-specific returns.
| Metric | SOXX | FTEC | |---|---|---| | Issuer | iShares | Fidelity | | Expense ratio | 0.34% | 0.08% | | 1-yr return (as of May 6, 2026) | 173.10% | 57.90% | | Dividend yield | 0.33% | 0.36% | | AUM | $33.8 billion | $17.9 billion |
The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Fidelity fund offers a significantly lower expense ratio of 0.08% compared to the 0.34% charged by the iShares ETF. While both funds focus on growth, the Fidelity fund provides a slightly higher trailing-12-month distribution yield for income-seeking investors.
| Metric | SOXX | FTEC | |---|---|---| | Max drawdown (5 yr) | (45.80%) | (34.90%) | | Growth of $1,000 over 5 years (total return) | $3,750 | $2,457 |
The Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) provides exposure to a broad range of technology companies by tracking the MSCI USA IMI Information Technology 25/50 Index. Its portfolio consists of 286 holdings, with its largest positions including Nvidia Corp (NASDAQ:NVDA) at 18.8%, Apple Inc (NASDAQ:AAPL) at 14.29%, and Microsoft Corp (NASDAQ:MSFT) at 9.91%. This Fidelity fund launched in 2013, reports no structural quirks, and paid $0.95 per share in dividends over the trailing 12 months.
In contrast, the iShares Semiconductor ETF (NASDAQ:SOXX) maintains a much tighter focus on the semiconductor industry, tracking a specialized index of U.S.-listed equities in that sector. Its portfolio holds 30 companies, and its largest positions include Micron Technology Inc (NASDAQ:MU) at 9.03%, Broadcom Inc (NASDAQ:AVGO) at 7.78%, and Advanced Micro Devices Inc (NASDAQ:AMD) at 7.70%. The fund is 100.00% concentrated in the technology sector. This iShares fund launched in 2001, reports no structural quirks, and has a trailing-12-month dividend of $1.67 per share.
For more guidance on ETF investing, check out the full guide at this link.
If you want exposure to the 30 largest U.S.-listed semiconductor companies, the SOXX ETF from iShares is hard to beat. By tracking only semiconductors, it’s been a big winner in the AI revolution. The ETF is up by 73% this year.
If semiconductor-specific exposure isn’t your goal, or you’re just plain nervous about the sustainability of semiconductor demand, Fidelity’s FTEC ETF seems like a better option.
In addition to a slightly higher dividend yield, FTEC offers a significantly lower expense ratio and a diversified approach for adjusting to industry cycles. This could come in handy if demand for semiconductors stalls.
If you’re not comfortable with all the volatility that comes with a narrow focus on semiconductors, FTEC looks like the right choice.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Broadcom, Micron Technology, Microsoft, Nvidia, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Investors should view FTEC as a broad tech-beta vehicle and SOXX as a tactical cyclical play, rather than choosing based on expense ratios which are secondary to the underlying sector concentration risk."
Comparing FTEC and SOXX is a fundamental category error. FTEC is a broad-beta play on the US IT sector, essentially a proxy for the 'Magnificent Seven' and their software/hardware ecosystem. SOXX is a high-beta cyclical play on the semiconductor supply chain. The article emphasizes the expense ratio (0.08% vs 0.34%) as a primary decision factor, which is noise; in a sector delivering 173% annual returns, the spread in fees is negligible compared to the tracking error and volatility profile. The real risk here isn't the fee—it's the massive overlap. FTEC’s 18.8% weighting in NVDA means you are already heavily exposed to the semiconductor cycle, just with more dilution from legacy software names.
The fee difference is irrelevant if the semiconductor cycle enters a multi-year secular expansion where the specialized concentration of SOXX significantly outperforms the broader, slower-moving IT index.
"SOXX's laser-focused semi exposure has crushed FTEC's returns and justifies the fee premium amid sustained AI-driven demand."
The article pitches FTEC as the prudent choice with 0.08% fees, 286 holdings, and lower 34.9% 5-yr max drawdown versus SOXX's 0.34% fees, 30 holdings, and 45.8% drawdown—but buries SOXX's blowout 173% 1-yr total return (vs FTEC's 57.9%) and $3,750 vs $2,457 growth of $1,000 over 5 years. Semis remain AI's beating heart (data center capex from MSFT/AMZN etc.), and FTEC's NVDA (18.8%) weighting makes its 'diversification' semi-beta in disguise, diluted by underperformers like AAPL. Fee savings are marginal; performance gap isn't. SOXX wins for growth chasers unless semis crater.
If AI spending plateaus or geopolitical risks (e.g., Taiwan tensions) hammer semis selectively, SOXX's concentration risks deeper drawdowns than FTEC's broader tech buffer.
"The article sells fee efficiency and diversification as virtues without confronting whether FTEC's 115-point annual underperformance reflects prudent risk management or opportunity cost from sector underweight."
This article conflates two separate investment decisions and obscures a critical timing problem. Yes, FTEC's 0.08% fee beats SOXX's 0.34%—that math is clean. But the article buries the real story: SOXX returned 173% in one year while FTEC returned 58%. That's not volatility; that's a 115-point performance gap. The article frames this as 'SOXX is riskier,' but doesn't ask whether semiconductor concentration is *currently* overvalued or undervalued relative to broad tech. FTEC's 286 holdings include NVDA at 18.8%—so you're getting semiconductor exposure anyway, just diluted. The article never addresses whether this dilution is a feature (diversification) or a bug (missing the actual alpha). Missing context: semiconductor cycle timing, AI capex sustainability, and whether SOXX's outperformance reflects justified fundamentals or bubble dynamics.
If semiconductors remain the structural beneficiary of AI infrastructure buildout through 2027, SOXX's 173% return could be the *correct* market signal, and FTEC's lower volatility is just the cost of being underexposed to the highest-conviction theme in tech.
"The optimal choice hinges on cyclical exposure and risk tolerance, not just fees; concentrated semiconductor exposure can outperform during AI-driven rallies, even if broad IT offers lower costs and more diversification."
Fidelity's FTEC offers lower fees and broader exposure, but the article glosses over cycle dynamics. The 1-year numbers tell a different story: SOXX up about 173% vs FTEC ~58%, underscoring how AI-fueled semis can outperform a broad IT basket for extended stretches. FTEC's 286 holdings don't immunize you from concentration risk— Nvidia weighs 18.8% and a few semis drive much of the move—while 5-year totals show SOXX delivering higher cumulative gains despite bigger drawdowns. In short, cost and diversification matter, but cyclical exposure and risk tolerance should dominate the decision—consider a blended stance rather than a wholesale swap.
If the AI mega-cycle persists, SOXX's tilt could keep delivering outsized gains, making FTEC's broad exposure and lower fee a potential missed upside. Diversification may dampen runaway rallies in semis when the cycle is strong.
"SOXX's concentration creates a binary risk profile that ignores the valuation safety net inherent in FTEC's broader software exposure."
Grok and Claude focus on the performance gap, but you are all ignoring the liquidity and tax-efficiency trade-offs. SOXX is a concentrated bet on a high-beta, cyclical supply chain that is currently priced for perfection. If the AI capex cycle hits a wall, the drawdown in SOXX won't just be 'higher'—it will be catastrophic due to the lack of secondary software revenue streams. FTEC provides a necessary valuation floor that SOXX lacks entirely.
"FTEC's software buffer doesn't insulate from AI/semiconductor cycle risks, amplifying SOXX's relative upside."
Gemini, FTEC's supposed 'valuation floor' from software is overstated—its top holdings like MSFT and GOOG are deeply tied to AI capex, mirroring semis risks without the purity. Liquidity/tax fears are baseless for both large-cap ETFs. Unflagged: SOXX's edge in capturing foundry equipment rebound (e.g., ASML cycle), where FTEC dilutes with laggards. Performance gap justifies the fee if cycle persists.
"FTEC's software revenue streams provide genuine downside protection that SOXX lacks; calling this 'mirroring semis risks' ignores earnings diversification."
Grok conflates MSFT/GOOG's AI capex *exposure* with semiconductor *supply-chain cyclicality*. FTEC's software names have diversified revenue (cloud services, advertising, enterprise licensing) that sustains earnings even if chip capex slows. SOXX has no such buffer—foundry equipment rebounds only if semis rebound. Gemini's 'valuation floor' argument holds. The liquidity point is fair, but tax efficiency favors FTEC for taxable accounts given SOXX's brutal drawdown volatility.
"SOXX's concentration exposes it to outsized tail risk in AI-cycle downturns; tail risk is not quantified in the article and warrants explicit stress-testing."
Gemini's liquidity/tax points are valid, but the bigger overlooked risk is semiconductors' tail-risk due to concentration. SOXX's high-beta, limited diversification can magnify outsized drawdowns during AI-cycle reversals or policy/shipping shocks; FTEC's broader software exposure may cushion those shocks. The article buries tail-risk metrics and scenario analysis; readers deserve explicit stress tests (AI capex slowdown, foundry capex peaking, geopolitical shocks) before declaring one ETF 'safer' than the other.
The panelists agree that the choice between FTEC and SOXX depends on risk tolerance and cycle dynamics. FTEC offers lower fees, broader exposure, and a potential valuation floor, while SOXX provides higher growth but with increased risk and volatility.
SOXX's potential for higher growth if the semiconductor cycle persists.
The high concentration and cyclical nature of SOXX, which could lead to catastrophic drawdowns if the AI capex cycle hits a wall.