Should You Invest in the VanEck Semiconductor ETF (SMH)?

Launched on December 20, 2011, the VanEck Semiconductor ETF (SMH) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Semiconductors segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $43.01 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Semiconductors segment of the equity market. SMH seeks to match the performance of the MVIS US Listed Semiconductor 25 Index before fees and expenses.

The MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 18.44% of total assets, followed by Taiwan Semiconductor Manufacturing Co L (TSM) and Broadcom Inc (AVGO).

The top 10 holdings account for about 74.74% of total assets under management.

Performance and Risk

The ETF has added about 5.67% so far this year and it's up approximately 73.16% in the last one year (as of 03/09/2026). In that past 52-week period, it has traded between $179.95 and $426.16.

The ETF has a beta of 1.54 and standard deviation of 33.25% for the trailing three-year period, making it a high risk choice in the space. With about 27 holdings, it has more concentrated exposure than peers.

Alternatives

VanEck Semiconductor ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SMH is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

State Street SPDR S&P Semiconductor ETF (XSD) tracks S&P Semiconductor Select Industry Index and the iShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index. State Street SPDR S&P Semiconductor ETF has $1.59 billion in assets, iShares Semiconductor ETF has $20.33 billion. XSD has an expense ratio of 0.35%, and SOXX charges 0.34%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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VanEck Semiconductor ETF (SMH): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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