Are semiconductor ETFs still a good investment?

They can be, but it depends on your outlook and risk tolerance. The long-term case for semiconductors remains strong because chips are becoming increasingly important for artificial intelligence, cloud computing, vehicles, industrial automation, and consumer electronics. However, expectations are already very high, and many semiconductor stocks trade at elevated valuations after a long bull market. Investors should also be prepared for high volatility and cyclical downturns along the way.

Which ETF is focused on semiconductors?

There are several major semiconductor ETFs available. The VanEck Semiconductor ETF (NASDAQ:SMH) is the largest and most concentrated toward top performers like NVIDIA. The iShares Semiconductor ETF (NASDAQ:SOXX) offers similar exposure with somewhat less concentration risk. The Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) focuses on lower fees, while the SPDR S&P Semiconductor ETF (NYSEMKT:XSD) uses an equal-weight approach to reduce dependence on mega-cap names.

Is there a Vanguard semiconductor ETF?

No. Vanguard currently does not offer a dedicated semiconductor ETF. Investors seeking semiconductor exposure through Vanguard generally need to use broader technology ETFs or purchase semiconductor ETFs from other providers.

What is the largest semiconductor ETF?

The largest semiconductor ETF is the VanEck Semiconductor ETF (NASDAQ:SMH), with more than $62 billion in assets under management. The fund has become especially popular because of its strong historical performance and large weighting toward leading semiconductor companies.

Best Semiconductor ETFs for 2026 and How to Invest

By Tony Dong – Updated May 15, 2026 at 1:44 AM EST | Fact-checked by Frank Bass

Key Points

Semiconductor ETFs offer broad AI sector exposure without needing specialized AI funds.
Investors should assess ETFs for concentration risks and fee structures to match risk profiles.
Diverse ETF options available, including those focusing on fee minimization or reduced concentration.

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VanEck Semiconductor ETF (SMH)

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NASDAQ: SMH

VanEck ETF Trust - VanEck Semiconductor ETF

Today's Change

(-3.30%) $-19.10

Current Price

$559.24

Key Data Points

Day's Range

$553.00 - $563.59

52wk Range

$234.59 - $581.17

Volume

401K

The VanEck Semiconductor ETF (SMH -3.35%) is the largest semiconductor ETF on the market, with more than $62 billion in assets under management in mid-May 2026. It currently charges a 0.35% expense ratio.

Since launching in December 2011, the ETF has been one of the strongest-performing funds in the broader ETF universe, delivering a 29.23% annualized total return with dividends reinvested.

Income is not a major focus of this ETF, however. The portfolio currently offers just a 0.14% 30-day SEC yield because most semiconductor companies prefer reinvesting profits back into research, manufacturing capacity, and growth initiatives rather than paying large dividends.

Investors considering this ETF should pay close attention to concentration risk. The fund is market-cap weighted, meaning larger companies receive larger allocations. As of now, Nvidia (NVDA -3.51%) accounts for roughly 17% of the portfolio.

Allowing dominant winners like Nvidia to run over time has helped drive SMH’s strong historical returns. Still, it also means the ETF is now more dependent on the continued performance of a handful of mega-cap semiconductor stocks.

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iShares Semiconductor ETF (SOXX)

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NASDAQ: SOXX

iShares Trust - iShares Semiconductor ETF

Today's Change

(-3.19%) $-16.93

Current Price

$513.10

Key Data Points

Day's Range

$506.26 - $516.66

52wk Range

$199.93 - $533.74

Volume

5.1M

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The iShares Semiconductor ETF (SOXX -3.31%) is the second-largest semiconductor ETF by assets under management, sitting at roughly $33.45 billion in May 2026. The fund charges a 0.34% expense ratio and tracks the NYSE Semiconductor Index, which comprises 30 large, liquid semiconductor companies listed on U.S. exchanges.

The portfolio overlaps substantially with SMH, but the weighting approach reduces concentration risk. Currently, Nvidia is only the fifth-largest holding at 6.78% of the portfolio. The top holding is currently Micron Technology (MU -5.80%) at 10.11%, still notably below the concentration levels seen in SMH.

That lower concentration has translated into slightly lower long-term returns, though it remains extremely strong overall. Over the past 10 years, the ETF has compounded at a 28.11% annualized rate, trailing SMH largely because of its smaller Nvidia weighting.

Investors should still expect substantial volatility. According to iShares, the ETF has carried a trailing three-year beta of 1.89, making it almost twice as sensitive to market movements as the S&P 500. Its three-year annualized standard deviation of 33.98% also highlights the potential for sharp upward and downward share-price swings.

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Invesco PHLX Semiconductor ETF (SOXQ)

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NASDAQ: SOXQ

Invesco PHLX Semiconductor ETF

Today's Change

(-3.21%) $-3.05

Current Price

$91.95

Key Data Points

Day's Range

$90.69 - $92.53

52wk Range

$36.63 - $95.56

Volume

1.3M

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The Invesco PHLX Semiconductor ETF (SOXQ -3.21%) shows that there is more than one way to gain semiconductor exposure. If your main priority is minimizing fees, this ETF may be one of the more appealing choices in the category, thanks to its 0.19% expense ratio.

On a $10,000 investment, that works out to roughly $19 in fee drag per year, compared with about $35 for the VanEck and iShares semiconductor ETFs. Over long holding periods, that cost difference can compound meaningfully.

The ETF’s structure is relatively straightforward. It tracks a concentrated portfolio of 31 large U.S.-listed semiconductor companies spanning the semiconductor value chain, including chip designers, microprocessor firms, integrated circuit manufacturers, semiconductor equipment companies, and fabrication-related businesses.

In terms of concentration risk, the portfolio sits somewhere between SMH and SOXX. There is still substantial overlap among all three ETFs, but the weightings are less extreme than SMH while remaining more concentrated than SOXX. Nvidia, Micron Technology, and Broadcom (AVGO -2.67%) collectively accounted for just under one-third of the ETF in May 2026.

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State Street SPDR S&P Semiconductor ETF (XSD)

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NYSEMKT: XSD

SPDR Series Trust - State Street SPDR S&P Semiconductor ETF

Today's Change

(-3.26%) $-18.43

Current Price

$546.76

Key Data Points

Day's Range

$538.20 - $550.88

52wk Range

$217.55 - $575.49

Volume

85K

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One thing investors should note about market-cap-weighted semiconductor ETFs is that they can become extremely top-heavy late in a bull market. Companies that perform well naturally grow into larger portions of the portfolio, eventually creating a situation where just a handful of stocks drive most of the ETF’s returns and risk.

If you are more sensitive to valuations and concentration risk, the SPDR S&P Semiconductor ETF (XSD -3.26%) may be worth considering. Unlike the other semiconductor ETFs discussed earlier, this fund uses an equal-weight approach. It charges a standard 0.35% expense ratio, and all 44 holdings are reset to roughly equal weights every quarter, regardless of whether they are small-, mid-, or large-cap semiconductor companies.

In practice, this creates a natural buy-low, sell-high mechanism because the ETF trims stocks that have outperformed and adds to those that have lagged. That can help temper concentration risk and volatility over time. The trade-off is that during long semiconductor bull markets, equal weighting can lag market-cap-weighted approaches because it prevents dominant winners from compounding unchecked.

That dynamic helps explain why the ETF has delivered a somewhat lower 28.29% annualized return over the trailing 10-year period. Even so, that remains an extremely strong result relative to the broader stock market.

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Open your brokerage account: Log in to your brokerage account where you manage your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
Search for the ETF: Enter the ticker symbol in the search bar to open the ETF's trading page.
Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

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Benefits of investing in semiconductor ETFs

Semiconductor ETFs have historically offered the potential for above-average capital appreciation, particularly during periods of strong technology spending, low interest rates, and rising demand for AI infrastructure, cloud computing, and data centers.
They provide diversification within the semiconductor industry itself. While still sector-specific, these ETFs reduce company-specific risk by spreading exposure across chip designers, manufacturers, equipment firms, memory producers, and fabrication companies. In market-cap-weighted funds, successful companies naturally increase their portfolio weights over time.
Many semiconductor ETFs are relatively tax-efficient because the underlying companies tend to reinvest profits back into growth rather than pay large dividends. Lower portfolio yields can reduce annual tax drag in taxable brokerage accounts.

Risks of investing in semiconductor ETFs

The semiconductor industry is highly cyclical. Demand can swing sharply depending on economic growth, consumer spending, inventory cycles, and capital expenditure trends, leading to periods of oversupply and falling profits.
Semiconductor ETFs can experience very high volatility. Many funds carry elevated betas and standard deviations relative to the broader market, resulting in larger price swings during both rallies and downturns.
Valuations can become stretched during technology bull markets. Semiconductor stocks may trade at high multiples of earnings and can also become technically overbought after strong momentum runs, increasing the risk of sharp pullbacks if growth expectations cool.

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The first step is determining why you want semiconductor exposure in the first place. It is important not to simply chase past performance. Semiconductor ETFs have delivered exceptional returns over the last decade. However, investors should still have a clear thesis for why they believe the industry’s future growth is not yet fully reflected in current prices.

For example, you may conclude after your own research that long-term demand from AI cloud computing, data centers, and advanced electronics remains underestimated by the market. In that case, a semiconductor ETF can help you express that view without tying your outcome to the success or failure of any single company.

Even then, position sizing matters. Semiconductor stocks are volatile and cyclical, so many investors use them as part of a core-and-satellite portfolio approach. In practice, that can mean building the core of a portfolio around an index fund, such as an S&P 500 ETF, then adding a smaller semiconductor ETF allocation on top to seek additional upside potential.

That structure can help investors participate in semiconductor growth while reducing the risk of becoming overly concentrated in one fast-moving part of the market, something many investors learned the hard way during the dot-com era.

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Best Semiconductor ETFs for 2026 and How to Invest