XSD Delivers 1,138% in Ten Years, Yet Trails SOXX in the AI Boom
The XSD equal-weight ETF returned 1,138% over ten years, but trailed the cap-weighted SOXX as NVIDIA and Broadcom dominate AI-driven gains.
Key Numbers
According to a report by 24/7 Wall St., the standard way to own semiconductors is to buy a cap-weighted fund and accept that NVIDIA, Broadcom, and TSMC will dominate returns. The SPDR S&P Semiconductor ETF (NYSEARCA: XSD) takes the opposite approach. It uses a modified equal-weight methodology against the S&P Semiconductor Select Industry Index, so a $200 billion analog chipmaker carries roughly the same weight as NVIDIA.
Long-Term Performance of XSD
Over the past ten years, XSD has delivered a cumulative return of 1,138%, a very strong performance. However, this return lags behind the iShares PHLX Semiconductor Sector Index ETF (SOXX), which benefits from heavy concentration in AI stocks like NVIDIA.
Why XSD Trails SOXX in the AI Boom
The main reason is that XSD distributes weight equally across all companies in the index, reducing the impact of outsized returns from stocks like NVIDIA and Broadcom. In contrast, SOXX gives greater weight to these companies, boosting its performance during periods of market focus on AI.
What This Means for Investors
XSD offers broader diversification and reduces single-stock concentration risk, but may miss out on large gains from leading stocks during technology booms. Investors seeking balanced exposure to the semiconductor sector may prefer XSD, while those betting on continued AI dominance may choose SOXX.
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