The VanEck Semiconductor ETF (SMH) was launched on 12/20/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Semiconductors segment of the equity market.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many 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 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $23.72 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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

It has a 12-month trailing dividend yield of 0.38%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 27.75% of total assets, followed by Taiwan Semiconductor Manufacturing Co L (TSM) and Advanced Micro Devices Inc (AMD).

The top 10 holdings account for about 73.57% of total assets under management.

Performance and Risk

So far this year, SMH has added about 55.82%, and is up about 78.33% in the last one year (as of 06/18/2024). During this past 52-week period, the fund has traded between $137.46 and $272.48.

The ETF has a beta of 1.34 and standard deviation of 33.12% 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.

First Trust NASDAQ Semiconductor ETF (FTXL) tracks Nasdaq US Smart Semiconductor Index and the iShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index. First Trust NASDAQ Semiconductor ETF has $1.64 billion in assets, iShares Semiconductor ETF has $16.07 billion. FTXL has an expense ratio of 0.60% and SOXX charges 0.35%.

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

Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report

iShares Semiconductor ETF (SOXX): ETF Research Reports

First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports

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