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SMH Constituents Are Fast-Growing Companies

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Exposure to the semiconductor industry

The VanEck Vectors Semiconductor ETF (SMH) offers investors concentrated exposure to the global semiconductor industry. Of the largest 50 stocks in the semiconductor sector by market capitalization, the index seeks to track the top 25 most liquid companies based on market capitalization and trading volume.

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Concentrated portfolio

The index’s selection methodology for its constituents favors the largest companies in the industry. Consequently, nearly all of the fund’s portfolio is invested in large-cap stocks with market capitalizations of more than $5.0 billion. The portfolio includes domestic as well as US-listed foreign companies that help widen the industry representation. The index has 25 constituents, and about 24.0% of them are foreign companies.

Given the small number of companies in the portfolio, the top ten holdings account for around 64.2% of its total assets. As a percentage of net assets, the top five stocks in the index are Taiwan Semiconductor Manufacturing (TSM) (12.6%), Intel (INTC) (10.9%), Nvidia (NVDA) (6.0%), Broadcom (AVGO) (5.4%), and ASML Holding (ASML) (5.3%). Many of these constituent companies are well placed to cash in on the rapid growth in the semiconductor industry.

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