Quick Read
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SOXQ topped SMH by 6 points over the past year and 7 in 2026, but SMH leads by roughly 77 points over five years.
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Selling SMH in a taxable account likely triggers capital gains that could easily erase SOXQ's narrow performance edge.
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Both funds concentrate entirely in one sector, so switching between them does nothing to reduce chip-cycle risk.
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The VanEck Semiconductor ETF( NASDAQ:SMH ) is the best-known way to own the chip boom, and SMH holders have done well, with a one-year return of 61.32%. Investors buy SMH because it gives them the industry's leaders in one liquid ticker. Over that timeframe, a younger fund, the Invesco PHLX Semiconductor ETF( NASDAQ:SOXQ ), returned 67.69%, beating SMH by 6.37 points. Both one-year windows start on October 16, 2025, and both figures assume distributions were reinvested.
Invesco Leads in 2026
The gap is larger for the calendar year. SOXQ is up 60.75% year-to-date, while SMH is up 53.31%, an advantage of 7.44 points. Anyone who picked the Invesco fund on January 1 has kept more of this year's semiconductor rally.
Five-Year Returns Strongly Favor VanEck
Over five years, the ranking reverses. Since October 15, 2021, SMH has returned 333.41% versus 256.91% for SOXQ, putting VanEck ahead by 76.5 points.
That five-year lead is far larger than the Invesco fund's recent edge over one year or year-to-date. Holding SMH for the full five years produced far better results than holding SOXQ. Any case for switching depends on recent results, and the long-run record points the other way.
Invesco's Fund Has a Short Track Record
SOXQ's price history starts on June 11, 2021, so no ten-year comparison is possible. All side-by-side evidence for these funds falls within about the past five years, and within that span, SMH holds the longer-term advantage while SOXQ's lead covers only the most recent year.
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Different Indexes Produce Different Results
According to VanEck, SMH tracks the MVIS US Listed Semiconductor 25 Index, which follows the largest and most liquid U.S. exchange-listed semiconductor companies. SOXQ tracks the PHLX Semiconductor Sector Index. Invesco says the index measures the largest U.S.-listed companies "engaged in the semiconductor business," and NASDAQ describes it as a "modified market capitalization-weighted index."
Both funds own chip companies, but each index sets its own rules for which stocks qualify and how much weight each one gets. As a result, the same industry rally can produce different returns in each fund. Because the two portfolios differ, the gap between them can grow, shrink, or reverse depending on which stocks lead.
Single-Industry Concentration Raises Risk in Both Funds
Both funds put all of their money into a single industry. One-year gains above 60% come with the potential for large losses, and either fund can fall sharply when the chip cycle turns. Moving from one fund to the other keeps that sector risk fully in place. Unease about the size of an SMH position is really an allocation question, and switching to SOXQ won't answer it. One way to reduce that concentration without leaving the AI theme is to own the suppliers around the chipmakers (we highlighted seven of them, from power to cooling, in a free report you can grab here).
How to Make the Switch Without a Tax Surprise
Selling SMH after this run likely realizes a capital gain. In a taxable account, the tax owed could exceed a performance edge of a few points. In an IRA or 401(k), you can switch funds without an immediate tax bill. Investors seeking exposure to both indexes sometimes direct new contributions to SOXQ while keeping existing SMH shares.
The two funds operate differently in a few ways. SOXQ pays distributions quarterly, while SMH pays annually. In delayed quotes from Monday afternoon's session, SMH traded at $552.11 and SOXQ at $89.41, so SOXQ is easier to buy in small whole-share amounts. Check each fund's current expense ratio on the issuer's website before you place any trade.
Time Horizon Decides This Swap
About one year of outperformance is too little evidence to replace a fund that leads by 76.5 points over five years. Long-term holders, especially those with large unrealized gains in taxable accounts, face the highest cost from a switch. SOXQ has the smallest switching cost for investors with tax-deferred accounts or new money who want a second index approach next to SMH. Switching an entire position because of 2026 results counts entirely on the short-term trend continuing.
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