VanEck Semiconductor ETF (SMH): A Simple Guide for Beginners

Want to invest in computer chips without picking just one company? This article explains a popular fund that does that for you — in a super simple way!

What Is the VanEck Semiconductor ETF?

• If you want to broadly invest in the Technology – Semiconductors part of the stock market (semiconductors are the tiny chips inside phones, computers, and more), look no further than the VanEck Semiconductor ETF, also called SMH.
• SMH is a passively managed exchange traded fund (ETF).
  ETF = a basket of stocks you can buy like one single share.
  Passively managed = the fund just follows a list of companies, instead of a person picking them.
• It launched on December 20, 2011.

Why Passive ETFs Are Popular

Passively managed ETFs are liked by both big professional investors and regular people because they offer:

• Low cost
• Transparency (you can see what’s inside)
• Flexibility
• Tax efficiency (fewer tax headaches)

Important Point: Passive ETFs are excellent vehicles for long-term investors.

Sector ETFs: Easy and Diversified

• Sector ETFs are “funds of convenience.” They let you easily invest in a whole group of companies in one industry.
• They offer low-risk, diversified exposure (you’re not betting on just one company).
• The Technology – Semiconductors group is one of 16 broad Zacks sectors.
• It is currently ranked #2, which puts it in the top 13% of all sectors.

Index Details

• SMH is made by a company called Van Eck.
• It has gathered over $70.89 billion in assets, making it one of the biggest ETFs in this area.
• The fund tries to copy the performance of the MVIS US Listed Semiconductor 25 Index (before fees).
• That index tracks how companies doing semiconductor production and equipment are doing overall.

Costs

• An expense ratio is like a yearly fee taken from your investment. Lower is better!
• Over a long time, cheaper funds can beat pricier ones, all else being equal.
• SMH’s annual operating expense is 0.35% — one of the cheapest in its category.

Important Point: A 0.35% expense ratio means you pay $0.35 per year for every $100 invested.

Sector Exposure and Top Holdings

• ETFs give diversified exposure, which lowers the risk of one company ruining your investment.
• But you should still peek at what the fund holds before buying. Most ETFs show their holdings daily.
• In SMH:
  • Nvidia Corp (NVDA) = about 15.21% of total assets
  • Taiwan Semiconductor Manufacturing Co (TSM) = next biggest
  • Micron Technology Inc (MU) = another big one
• The top 10 holdings make up about 70.75% of all assets.

Performance and Risk

• So far this year, SMH is up about 62.61%.
• In the last one year (as of 07/14/2026), it was up about 103.7%.
• In the past 52 weeks, its price traded between $283.95 and $668.91.
• Risk measures:
  • Beta of 1.71 → moves more sharply than the overall market (high swinginess)
  • Standard deviation of 35.58% over 3 years → also shows high risk
• It holds about 27 companies, so it is more concentrated than some similar funds.

Important Point: SMH is considered a HIGH-RISK choice because of its big price swings.

Alternatives

• SMH has a Zacks ETF Rank of 1 (Strong Buy) based on expected returns, expenses, and momentum.
• Other semiconductor ETFs you could consider:
  1. State Street SPDR S&P Semiconductor ETF (XSD)
     • Tracks: S&P Semiconductor Select Industry Index
     • Assets: $3.00 billion
     • Expense ratio: 0.35%
  2. iShares Semiconductor ETF (SOXX)
     • Tracks: PHLX SOX Semiconductor Sector Index
     • Assets: $46.10 billion
     • Expense ratio: 0.34%

Bottom Line

• To learn more about SMH and other ETFs, you can visit the Zacks ETF Center to screen for funds that fit your goals.
• Zacks also offers free stock and ETF research reports if you want deeper info.

Summary

SMH is a passively managed ETF by VanEck that gives broad, low-cost access to semiconductor companies. It follows the MVIS US Listed Semiconductor 25 Index, costs 0.35% a year, and holds big names like Nvidia. It has done very well lately but is high-risk. If you want similar options, XSD and SOXX are alternatives. Always check a fund’s holdings and costs before investing!

FAQ

1. What does SMH actually invest in?
It invests in about 27 U.S.-listed companies that make or equip semiconductors, following the MVIS US Listed Semiconductor 25 Index.

2. Is SMH safe?
It is not low-risk. With a beta of 1.71 and 35.58% standard deviation, its price can swing a lot. It is best for investors okay with ups and downs.

3. How much does it cost to own SMH?
The yearly expense ratio is 0.35%, which is low compared to many other funds in this space.

4. What are some alternatives to SMH?
XSD (SPDR S&P Semiconductor ETF) and SOXX (iShares Semiconductor ETF) are two similar options with comparable fees.

5. Where can I learn more?
You can read more and screen ETFs at the Zacks ETF Center or look up SMH’s research report on Zacks.