Even With SOXX and DRAM Down Between 24% and 42% From Their Highs, I'd Still Rather Buy This Vanguard ETF for Semiconductor Stock Exposure
2026-10-23 11:00
•Daniel Foelber •The Motley Fool
•••• ••••••••• Axe Cap view
Look Beyond DRAM and SOXX: Why VGT Makes More Sense for Tech Exposure
Despite steep falls in semiconductor ETFs DRAM and SOXX, Vanguard’s broad tech ETF VGT offers a smarter, lower-cost way to ride the AI wave.
South African investors tempted by semiconductor ETFs like DRAM and SOXX need to pause before jumping in. DRAM’s ultra-concentrated holdings—three stocks make up 75%—mean headline returns are risky, and the high fees (0.65%) hurt returns over time. SOXX is more balanced but still narrowly focused on semiconductors alone. VGT, by contrast, covers over 300 tech companies, blending hardware giants like Nvidia with software heavyweights such as Microsoft and Apple. This mix captures AI infrastructure and application demand across multiple cycles, crucial beyond the memory chip boom. Plus, VGT’s low 0.09% fee leaves more money compounding in your pocket. For JSE-linked investors, think of VGT as a proxy for global tech exposure complementing rand-hedged positions in Prosus or Naspers. The rand’s current weakness (USD/ZAR above 19) also boosts offshore returns. Caveat: VGT excludes Taiwanese firms like TSMC, so consider adding TSM stock separately for full semiconductor sector exposure. this is just our opinion and not financial advice
Buy VGT for broad, cost-efficient global tech exposure and top it up with a direct position in TSM to cover key semiconductors missing from VGT. Trim any heavy exposure to DRAM for diversification and fee reasons.
- VGT
- TSM
- USD/ZAR
- Rand strengthens sharply, reducing offshore gains
- Geopolitical tensions disrupt semiconductor supply chains
6/10
While semiconductor ETFs SOXX and DRAM have experienced significant declines from their highs, the article argues that the Vanguard Information Technology ETF (VGT) is a better long-term investment choice. VGT offers broader tech sector exposure including AI infrastructure and software, lower fees (0.09% vs 0.65%), and more diversification across 314+ holdings compared to DRAM's concentrated bet on three memory chip stocks. The author suggests pairing VGT with individual international semiconductor holdings for customized exposure.
Our take is based on reporting first published by The Motley Fool.