The Fidelity MSCI Information Technology Index ETF (FTEC 0.18%) tracks a wide range of US technology stocks for diversified sector coverage, while the iShares Semiconductor ETF (SOXX 1.05%) focuses on American listed semiconductor companies. This comparison highlights the key differences in costs, diversification and risk for investors considering these two funds.
Snapshot (cost and size)
| Metric | SOXX | FTEC |
|---|---|---|
| Publisher | IShares | Fidelity |
| Cost ratio | 0.34% | 0.08% |
| 1-year return (as of October 31, 2025) | 28.64% | 26.99% |
| Dividend yield | 0.5% | 0.4% |
| AUM | $16.8 billion | $17.5 billion |
Beta measures price volatility relative to the S&P 500; The figures use weekly returns over five years.
FTEC is more affordable with a lower expense ratio, which can be attractive to cost-conscious investors. The difference in dividend yield between the two funds is minimal.
Performance and risk comparison
| Metric | SOXX | FTEC |
|---|---|---|
| Maximum withdrawal (5 years) | (45.75%) | (34.95%) |
| Growth of $1,000 over 5 years | $2,842 | $2,568 |
What’s in it
FTEC covers virtually the entire US technology sector and owns 288 stocks with a twelve-year track record (as of November 3, 2025). The portfolio consists of 98% technology and 1% communication services, including top positions Nvidia, MicrosoftAnd Apple. The fund’s holdings include both technology and communications services companies, providing broad exposure across the sector.
SOXX, on the other hand, is a concentrated bet on semiconductors, with just 35 stocks. The portfolio consists of 100% technology, with top positions in Advanced micro devices (AMD), Broadcomand Nvidia. This focus could mean higher volatility and sharper price declines, but also the potential for stronger returns as semiconductor stocks outperform the broader technology sector.
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Foolishly taken
Both the iShares Semiconductor ETF (SOXX) and the Fidelity MSCI Information Technology Index ETF (FTEC) offer exposure to the popular artificial intelligence sector. The former does this through its focus on semiconductor stocks, which are key suppliers of technology needed to run AI systems.
The latter does this through holding companies that include shares that are also held by the SOXX ETF, such as Nvidia and AMD. But FTEC also includes non-semiconductor stocks that have posted huge gains over the past year. For example, the top ten holding companies include: Palantira software company that uses AI to deliver business insights, and whose shares are up more than 200% in the past twelve months through November 4.
SOXX’s strength comes from the current environment where semiconductor stocks are set to post huge gains over the next decade. Governments and businesses are replacing existing hardware with specialized AI chips that can support the computing needs of artificial intelligence.
But you get that exposure through FTEC’s semiconductor interests, while you also benefit from major technology players such as Microsoft. These non-semiconductor companies are also positioned to see business growth from AI, and that benefit is not available in the SOXX ETF.
Given this more diversified exposure to technology combined with FTEC’s lower fees, and these factors, the ETF is a better choice than SOXX.
Glossary
ETF (exchange traded fund): A fund that trades on stock exchanges and holds a basket of assets such as stocks or bonds.
Cost ratio: The annual fee, as a percentage of assets, that investors pay to own a fund.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its price.
Beta: A measure of the volatility of an investment compared to the overall market; a higher beta means greater risk.
AUM (assets under management): The total market value of assets that a fund manages on behalf of investors.
Maximum absorption: The largest percentage drop from a fund’s peak value to its lowest point over a given period.
Semiconductor: A material or company involved in making chips essential for electronic devices and computers.
Sector coverage: The range of sectors or segments within a broader market in which a fund invests.
Portfolio: The collection of investments of a fund or investor.
Diversification: Spreading investments across different assets to reduce risk.
Variability: The degree of variation in the price of an investment over time, which indicates the level of risk.
Robert Izquierdo has positions in Advanced Micro Devices, Apple, Broadcom, Microsoft, Nvidia and Palantir Technologies. The Motley Fool holds and recommends Advanced Micro Devices, Apple, Microsoft, Nvidia, Palantir Technologies, and iShares Trust – iShares Semiconductor ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
