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Quick Read
- PSI has surged 92% year-to-date versus QQQ's 18%, and its decade-long outperformance shows the gap is not a 2026 anomaly.
- PSI deliberately underweights NVIDIA to roughly 4% and concentrates on mid-cap semiconductor equipment makers that QQQ barely touches.
- PSI's elevated volatility, with single-day drops of nearly 5%, makes adding it as a satellite around a QQQ core smarter than a full swap.
- Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
Anyone holding the Invesco QQQ Trust (NASDAQ:QQQ) in 2026 has watched a decent year unfold. QQQ tracks the Nasdaq-100 and has returned 18.1% year-to-date, riding the AI capex wave that continues to power its largest holdings. With $680.53 billion in assets and a 0.18% expense ratio, QQQ remains the default vehicle for broad, tech-heavy US growth. The case for holding it is real. The case for supplementing it with a narrower, purer semiconductor sleeve is stronger than most QQQ owners realize, and one of Invesco's sister funds has quietly made this year a very different story.
Why QQQ Owners Are Leaving Return on the Table
The top weights are NVIDIA at 8.01%, Apple at 7.26%, Micron at 4.78%, and Microsoft at 4.49%. That mix delivered a 30.62% one-year return, but the semiconductor thread inside the fund is diluted by mega-cap software, consumer hardware, and communication services. When chip stocks lead, the fund captures only the slice of that move that its weightings allow. In 2026, that slice has been small relative to the sector's actual performance.
The Invesco Semiconductors ETF (NYSEARCA:PSI) is the concentrated version of the trade QQQ makes only partially. PSI is up 92.33% year-to-date through July 13, more than five times QQQ's YTD gain. Over the trailing year, PSI has returned 145.91% versus QQQ's 30.62%. Over the past 10 years, PSI has returned 1,591.7%, compared with QQQ's 550.74%. The gap is not a one-year fluke.
What PSI Actually Owns
The semiconductor ETF holds 33 positions, and the weighting philosophy is the mechanism behind the outperformance. As of April 30, 2026, the largest position was MaxLinear at 7.98%, followed by AMD at 6.26%, Texas Instruments at 4.97%, Broadcom at 4.84%, and Micron at 4.67%. NVIDIA sits at just 3.91%, roughly half its weight in the broader tech fund.
The semiconductor ETF deliberately underweights the mega-cap chip names that dominate the broader tech fund and instead concentrates on mid-cap semiconductor equipment makers, analog specialists, and packaging players. Semiconductor equipment stocks (Lam Research, Applied Materials, and KLA collectively at roughly 12.3% of assets) benefit directly from the wafer fabrication capex cycle that PineBridge and Goldman Sachs both flagged in their 2026 outlooks as a durable multi-year tailwind. Owners of the broader tech fund get only faint exposure to those names, if at all.
The Tradeoffs Are Real
The semiconductor fund charges 0.45%, more than double the broader tech fund's 0.18%. It carries a P/E of 66, a rich multiple that leaves little room for error. And it is small: $1.995 billion in net assets, a fraction of the larger fund's $680 billion base. Volatility is elevated. The semiconductor fund fell 4.86% on July 13 alone and is down 9.67% over the past month, while the broader fund dropped 1.9% that same session. A concentrated sector fund cuts both ways.
Tax treatment is another consideration. Selling QQQ in a taxable account after a 30.62% one-year run likely triggers meaningful capital gains. For readers weighing a full swap, the arithmetic often favors adding PSI as a satellite position around a QQQ core rather than replacing it outright. Investors focused on the AI infrastructure buildout may find the Next Nvidia Playbook a useful frame for identifying which chip-adjacent names are pricing in the most durable demand.
How to Think About the Swap
The semiconductor fund has outrun the broader tech fund by more than a five-to-one margin in 2026 because it owns the exact slice of the market that has led, without the drag of Apple, Microsoft, Alphabet, and consumer-facing tech. That edge will hold as long as semiconductor capex and AI-driven chip demand remain the market's dominant growth drivers. It reverses quickly if the cycle rolls over, and the semiconductor fund's month-to-date drawdown is a preview of what that looks like.
For a QQQ holder whose thesis is specifically the chip cycle, PSI captures that thesis with far greater fidelity, at the cost of 27 additional basis points and materially higher volatility. For a QQQ holder who wants the whole Nasdaq 100, including its non-semiconductor giants, the incumbent still does its job. The decision comes down to which exposure the investor actually meant to buy.
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