Inside SOXX: The Few Names Behind The Fund’s Big Year

A look under the hood reveals the semiconductor fund’s impressive return was powered by a very small group of its holdings.

The biggest drag on the iShares Semiconductor ETF (SOXX) over the past year was Skyworks Solutions (SWKS). While it only makes up 0.5% of the fund, it fell 5.1%, chipping away at the portfolio’s overall result. It was one of the few holdings to end the year in the red, which makes the fund’s total gain all the more interesting.

That gain was +147.8% over the past year. But if you own this fund, you should know that the return wasn’t earned equally across its portfolio. The performance was delivered by a small handful of standout winners doing the heavy lifting.

So, Who Did All The Work?

The single biggest contributor to the fund’s return was Micron Technology (MU). The stock, which makes up 8.4% of the fund, returned an astounding +800% over the past year. Its performance alone added a significant layer to the fund’s total return. It wasn’t the only one, of course. The next biggest contributor was Intel (INTC), which returned +470% from its position as 6.1% of the fund.

While the vast majority of the fund’s largest holdings posted gains, with 27 of the 28 largest holdings rising, the scale of the contribution from the top was highly concentrated. The median holding among that group returned +139%, a strong number but a fraction of what the top performer delivered.

A Story Of Concentration

When you look at where the gains came from, the picture becomes even clearer. The five biggest contributors produced about 65% of the combined gains from the holdings measured. This means that while you own a basket of 30 positions, your return was disproportionately driven by a select few.

This concentration is also visible in the fund’s structure. The five largest holdings make up 35.7% of the fund, and the ten largest make up 59.4%. When a top holding like Micron has an exceptional year, it pulls the entire fund up with it. The flip side, of course, is that your investment is more exposed to the fortunes of these specific companies than the fund’s total number of holdings might suggest.

For an owner of SOXX, the key takeaway isn’t a reason to buy or sell, but a need for clarity. You own an index fund designed to track companies in the semiconductor industry, but the past year’s return was largely the story of a few key stocks. Knowing that your experience is closely tied to the performance of names like Micron Technology is the first step to truly understanding what you own.

How Concentrated Is The Rest Of Your Portfolio?

SOXX’s gains leaned on a handful of names, so your real exposure is more concentrated than the holdings count suggests. Knowing where a fund’s return really comes from is the whole game, because a basket that looks diversified can quietly ride on a few names. Our ETF Valuation and Performance Scorecard lets you compare the whole equity universe on exactly that, from return and risk-adjusted return down to how top-heavy each fund is, so you can see which funds spread their bets and which lean on a handful.

And if you would rather own deliberate diversification by design, the Trefis High Quality (HQ) Portfolio holds 30 individually screened names, rules-based and re-balanced, with a record of outpacing a benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000.