By David Beren
Publication Date: 2026-08-08 22:41:00
The VanEck Semiconductor ETF (NASDAQ:SMH) is the most popular way to bet on chips. SMH is the default semiconductor ETF for most brokerage accounts, prized for its concentrated exposure to the largest AI names and its long track record of leading the sector higher. That reputation is earned. But in 2026, a quieter chip fund with a flatter weighting has beaten SMH by roughly 20 percentage points year to date, and the reason has less to do with stock picking than with how the two indexes are built.
The alternative is the iShares Semiconductor ETF (NASDAQ:SOXX), which tracks the NYSE Semiconductor Index using a capped, more evenly distributed methodology. It holds many of the same names as SMH, but the weights sit closer together across the top of the book. That subtle structural difference has produced a large performance gap this year.
Why Investors Hold SMH
Concentration in the largest chip companies is what SMH delivers as a market-cap-weighted fund. According to the most recent fact sheet dated May 27, 2026, the top five positions are AMD at 10.33%, Broadcom at 9.57%, Micron at 9.39%, Taiwan Semiconductor at 8.75%, and NVIDIA at 8.4%. The top 10 combined represent roughly 71% of total assets. Investors buy SMH precisely because it puts real weight behind the industry leaders and does not dilute exposure with second-tier names.
The expense ratio is 0.35%, competitive for a sector fund. Liquidity is deep. For someone seeking a single ticker that captures the…