ETF v praxi
SMH (VanEck Semiconductor): ETF review — half the world in a chip
Key takeaways
- SMH replicates the MVIS US Listed Semiconductor 25 index, which covers the 25 largest global companies in the semiconductor manufacturing and development chain listed in the US.
- The fund is classified as a thematic satellite with high concentration — the top three positions can account for over 40% of the fund. Invest only a portion of your portfolio, not the core.
- Geopolitical risks (US vs. China, chip export controls) are key to SMH's performance — more so than with broad indices.
- SMH is an accumulating fund with Irish domicile (ISIN IE). Always verify the current TER on justETF.
- Semiconductors are the backbone of the modern economy — AI, cars, data centres. The sector grows, but goes through cyclical swings that can be very deep.
What the fund tracks
The underlying index MVIS US Listed Semiconductor 25 selects companies listed on US exchanges that generate at least 50% of their revenue from the semiconductor industry. It includes established names such as NVIDIA, TSMC (via US ADRs), Intel, ASML and Qualcomm. The index is rebalanced quarterly and is market-cap weighted with a maximum single-position cap to reduce extreme concentration.
Key parameters
SMH is an accumulating fund with Irish domicile (ISIN starts with IE). Dividends are reinvested automatically. The fund is denominated in USD, which adds currency risk for Czech investors. Always verify the current TER on justETF — thematic ETFs tend to have higher fees than broad-market funds.
Risks of a thematic ETF
SMH carries three specific risks you will not find in broad indices:
- Sector concentration — the entire fund depends on the health of a single industry. If the chip market experiences a cyclical downturn (and historically this happens regularly), the fund will fall significantly more than a global index.
- Geopolitics — the US has introduced export controls on chip technology heading to China. Escalation can immediately affect companies like NVIDIA or ASML, whose Chinese revenue is critical.
- Valuation — during the AI boom semiconductor companies are valued at high multiples. Revaluation can be swift and painful.
Who SMH is for
SMH is a pure satellite — never the core of a portfolio. It suits investors who believe in the long-term growth of chip demand (AI, electric vehicles, data centres, IoT) and are willing to accept higher volatility. Recommended portfolio weight: 5–15%, depending on risk tolerance. Alongside SMH there should be a solid base in a broader fund — for example IWDA or EQQQ. An overview of how to combine ETFs is on the ETF page.
Role in a portfolio
SMH brings strong exposure to a structural theme — the digitalisation of the entire economy. But at the cost of volatility and geopolitical sensitivity. If you are aware of this and account for it, SMH can be a powerful complement. If you are looking for a quiet life, stick to broader indices.
FAQ
Why is TSMC in SMH when it is a Taiwanese company?
TSMC trades on the NYSE via American depositary receipts (ADRs). The MVIS index selects companies listed on US exchanges — which is why TSMC qualifies despite its Taiwanese origin.
How volatile is SMH?
Historically SMH is one of the most volatile ETFs available in Europe. In the 2022 technology sell-off it fell by more than 40%. If you plan to invest, you must be prepared to see such a swing — and not panic-sell.
Is SMH suitable for DCA (regular investing)?
Yes, regular investing (dollar-cost averaging) makes sense for volatile funds — you buy even during downturns. The key is to set SMH's weight in the portfolio in advance and not to exceed it just because the fund happens to be rising.
What is the difference between SMH and XAIX?
SMH focuses purely on semiconductors. XAIX from Xtrackers targets AI and big data more broadly — including software companies and cloud operators. SMH is therefore a purer and more concentrated bet on hardware.