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  • SMH ETF: A Strategic Bet on the Global Semiconductor Powerhouses

    1) ETF Overview – Key Facts

    • Issuer: VanEck
    • Inception Date: December 20, 2011
    • Benchmark Index: MVIS US Listed Semiconductor 25 Index
      → Tracks 25 of the largest and most liquid semiconductor companies listed in the U.S., including U.S. and international firms.
    • Expense Ratio: 0.35%
    • Dividend Frequency: Annually (typically in December)
    • Recent Dividend Yield: ~0.43% (as of 2024)
    • Share Price: Approximately $247.29 (as of May 2025)
    • Average Daily Volume: Around 7 million shares

    2) Pros 👍 / Cons 👎

    👍 Pros

    • Concentrated exposure to top semiconductor names: Includes Nvidia, TSMC, Broadcom, and more
    • Global reach: Not limited to U.S. firms — also includes TSMC (Taiwan) and ASML (Netherlands)
    • High liquidity: Easy to trade with large daily volume
    • Simple, large-cap focused portfolio: Easy to understand holdings

    👎 Cons

    • Limited diversification: Only 25 holdings
    • Heavy weighting in top names: Top 5 holdings make up over 50% of the fund
    • TSMC exposure via ADR: Involves some foreign taxation/structure risks
    • No exposure to big tech like Apple or Microsoft

    3) Historical Performance (Annualized Returns)

    • 10-Year Average: ~25%
    • 5-Year Average: ~28%
    • 1-Year Return: ~50%

    Source: VanEck, as of May 2025

    4) Dividend Growth

    Although SMH is not a dividend-focused ETF, payouts have grown over time.

    YearAnnual Dividend
    2020$0.75
    2021$0.79
    2022$1.20
    2023$1.04
    2024$1.07

    Source: VanEck dividend history

    5) Sector Composition – What Each Company Does

    SMH holds 25 companies in the semiconductor industry. Here’s a quick breakdown of their roles:

    1. Nvidia (NVDA) – GPU and AI chip design
    2. Taiwan Semiconductor (TSMC) – Leading pure-play foundry (contract manufacturing)
    3. Broadcom (AVGO) – Connectivity and data center chips
    4. ASML (ASML) – Lithography equipment for chip manufacturing
    5. Applied Materials (AMAT) – Semiconductor production equipment and services
    6. AMD (AMD) – CPUs and GPUs
    7. Qualcomm (QCOM) – Mobile chips and communication technologies
    8. Analog Devices (ADI) – Analog and mixed-signal chips
    9. KLA Corp (KLAC) – Process control and inspection equipment
    10. Texas Instruments (TXN) – Analog chips and embedded processors
    11. Micron (MU) – Memory chips: DRAM and NAND
    12. Lam Research (LRCX) – Wafer fabrication equipment
    13. Intel (INTC) – CPUs and semiconductor manufacturing
    14. Cadence (CDNS) – Electronic Design Automation (EDA) software
    15. Synopsys (SNPS) – EDA tools and semiconductor IP
    16. Marvell (MRVL) – Storage, networking, and connectivity chips
    17. NXP (NXPI) – Automotive and secure connectivity chips
    18. Microchip (MCHP) – Microcontrollers and analog solutions
    19. Monolithic Power Systems (MPWR) – Power management chips
    20. STMicroelectronics (STM) – Sensors and analog components
    21. ON Semiconductor (ON) – Power semiconductors and sensors
    22. Teradyne (TER) – Semiconductor testing equipment
    23. Skyworks (SWKS) – Wireless connectivity chips
    24. Qorvo (QRVO) – RF and 5G wireless components
    25. Universal Display (OLED) – OLED materials and technology

    Source: VanEck, ETF.com

    6) Rebalancing Info

    • Frequency: Quarterly (4 times per year)
    • Method: Based on market cap and liquidity, per MVIS index methodology

    Real-World Example

    • In late 2023, Nvidia’s sharp rise increased its weight significantly
    • In 2022, AMD and ASML underperformed, while Broadcom gained a larger share

    7) Other Considerations

    • Similar but different from SOXX
      • SOXX: U.S.-only semiconductor exposure
      • SMH: Includes global names like TSMC and ASML
    • TSMC ADR: Be aware of potential tax implications and ADR structure
    • Higher concentration: More aggressive than broader ETFs like QQQ

    8) Final Thoughts

    SMH offers focused access to global semiconductor leaders — especially companies like Nvidia, TSMC, and ASML.
    It’s a great fit for investors who want to ride the semiconductor wave without picking individual stocks.

    That said, SMH’s recent performance was largely driven by Nvidia’s explosive growth. Whether this trend continues is uncertain.

    The semiconductor industry is inherently cyclical:

    • When demand surges, prices and profits skyrocket
    • When oversupply or slowdowns hit, the sector can fall hard

    Still, as the backbone of modern tech — AI, smartphones, data centers, EVs, robotics — semiconductors are here to stay.
    SMH gives you a way to invest in that backbone directly.

    Next Topic Teaser – SMH vs SOXX vs SOXQ

    In the next post, I’ll be comparing three major semiconductor ETFs side by side:

    • SMH by VanEck
    • SOXX by iShares (BlackRock)
    • SOXQ by Invesco

    We’ll explore the differences in:

    • index composition
    • expense ratios
    • dividend policies
    • global exposure
    • and overall portfolio structure

    If you’ve ever wondered which of these semiconductor ETFs aligns best with your strategy, the next deep dive will help you make that decision with confidence.

    9) Disclaimer & Closing Note

    Just to be clear — I’m not a financial advisor. I’m simply sharing my personal investing journey here. Please do what feels right for you. 🙂

    Thanks for reading — and as always, invest smart and stay consistent.
    See you in the next post! 🚀
    Step by step — that’s how we build something lasting.

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