Subscribe to Entrepreneur for $5
Subscribe

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

Sector ETF report for SMH

By
This story originally appeared on Zacks

Looking for broad exposure to the Technology - Semiconductors segment of the equity market? You should consider the VanEck Semiconductor ETF (SMH), a passively managed exchange traded fund launched on 12/20/2011.

- Zacks

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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 7, placing it in top 44%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $7.19 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 0.50%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Taiwan Semiconductor Manufacturing Co L (TSM) accounts for about 14.16% of total assets, followed by Nvidia Corp (NVDA) and Asml Holding Nv (ASML).

The top 10 holdings account for about 63.64% of total assets under management.

Performance and Risk

So far this year, SMH has gained about 37.96%, and is up roughly 54.03% in the last one year (as of 11/09/2021). During this past 52-week period, the fund has traded between $188.82 and $301.94.

The ETF has a beta of 1.16 and standard deviation of 34.61% for the trailing three-year period, making it a high risk choice in the space. With about 26 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 an outstanding 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.

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. SPDR S&P Semiconductor ETF has $1.44 billion in assets, iShares Semiconductor ETF has $8.97 billion. XSD has an expense ratio of 0.35% and SOXX charges 0.43%.

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.



Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

VanEck Semiconductor ETF (SMH): ETF Research Reports

 

NVIDIA Corporation (NVDA): Free Stock Analysis Report

 

ASML Holding N.V. (ASML): Free Stock Analysis Report

 

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

 

iShares Semiconductor ETF (SOXX): ETF Research Reports

 

SPDR S&P Semiconductor ETF (XSD): ETF Research Reports

 

To read this article on Zacks.com click here.