Best Semiconductor ETFs
Best Semiconductor ETFs
Semiconductors are silicon-based chips used to control electrical signals in countless devices. They're the building blocks behind everything from smartphones and electric vehicles to data centers and artificial intelligence, or AI.
"Semiconductors continue to be a cornerstone for innovation, especially as AI models grow more powerful," explains Nick Frasse, product manager at VanEck. "We're closely watching compute and scaling laws – the trend of continuously increasing processing power – which strongly supports sustained semiconductor demand."
Over the past decade, the S&P Semiconductors Select Industry Index has delivered a 17.5% annualized return, outpacing both the S&P Software & Services Index (13.4%) and the S&P Tech Hardware Index (8.8%).
Growth for semiconductors has been fueled first by the Internet of Things (IoT), then cryptocurrency mining and gaming, and now the explosive demand for AI infrastructure. With a U.S.-led trade war on the horizon and escalating geopolitical tensions, this industry remains hotly watched and heavily traded.
"Geopolitical tensions and tariffs have made semiconductor supply chains more complicated, driving companies toward diversifying and localizing manufacturing," Frasse says.
For investors looking to tap into this trend, there's no shortage of ways to get exposure. While you could buy individual chipmakers, a semiconductor-focused exchange-traded fund, or ETF, offers built-in diversification – reducing single-stock risk while still participating in the sector's upside.
"The potential benefits of investing in semiconductor ETFs include exposure to a high-growth sector with strong fundamentals, diversification across multiple companies in the industry and the potential for long-term capital appreciation," says Sean August, CEO of August Wealth Management Group.
Here are seven of the best semiconductor ETFs to buy today:
ETFExpense ratio
VanEck Semiconductor ETF (SMH)
VanEck Fabless Semiconductor ETF (SMHX)
iShares Semiconductor ETF (SOXX)
Invesco PHLX Semiconductor ETF (SOXQ)
First Trust Nasdaq Semiconductor ETF (FTXL)
SPDR S&P Semiconductor ETF (XSD)
Direxion Daily Semiconductor Bull 3x Shares (SOXL)
"Semiconductors continue to be a cornerstone for innovation, especially as AI models grow more powerful," explains Nick Frasse, product manager at VanEck. "We're closely watching compute and scaling laws – the trend of continuously increasing processing power – which strongly supports sustained semiconductor demand."
Over the past decade, the S&P Semiconductors Select Industry Index has delivered a 17.5% annualized return, outpacing both the S&P Software & Services Index (13.4%) and the S&P Tech Hardware Index (8.8%).
Growth for semiconductors has been fueled first by the Internet of Things (IoT), then cryptocurrency mining and gaming, and now the explosive demand for AI infrastructure. With a U.S.-led trade war on the horizon and escalating geopolitical tensions, this industry remains hotly watched and heavily traded.
"Geopolitical tensions and tariffs have made semiconductor supply chains more complicated, driving companies toward diversifying and localizing manufacturing," Frasse says.
For investors looking to tap into this trend, there's no shortage of ways to get exposure. While you could buy individual chipmakers, a semiconductor-focused exchange-traded fund, or ETF, offers built-in diversification – reducing single-stock risk while still participating in the sector's upside.
"The potential benefits of investing in semiconductor ETFs include exposure to a high-growth sector with strong fundamentals, diversification across multiple companies in the industry and the potential for long-term capital appreciation," says Sean August, CEO of August Wealth Management Group.
Here are seven of the best semiconductor ETFs to buy today:
ETFExpense ratio
VanEck Semiconductor ETF (SMH)
VanEck Fabless Semiconductor ETF (SMHX)
iShares Semiconductor ETF (SOXX)
Invesco PHLX Semiconductor ETF (SOXQ)
First Trust Nasdaq Semiconductor ETF (FTXL)
SPDR S&P Semiconductor ETF (XSD)
Direxion Daily Semiconductor Bull 3x Shares (SOXL)
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Re: Best Semiconductor ETFs
VanEck Semiconductor ETF (SMH)
SMH is the largest U.S.-listed semiconductor ETF, with over $21 billion in assets under management. It tracks the MVIS U.S. Listed Semiconductor 25 Index, which emphasizes the largest and most liquid companies based on market capitalization and trading volume. Over the trailing 10-year period, SMH has delivered a 24.7% annualized return while charging a reasonable 0.35% expense ratio.
The ETF's top holdings are a "who's who" of the industry. "SMH prominently features Nvidia Corp. (NVDA), renowned for its graphics processing units, or GPUs," Frasse says. "SMH also includes ASML Holding NV (ASML), the dominant supplier of ultraviolet lithography systems essential for manufacturing chips, and holds Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), the world's largest contract chipmaker."
SMH is the largest U.S.-listed semiconductor ETF, with over $21 billion in assets under management. It tracks the MVIS U.S. Listed Semiconductor 25 Index, which emphasizes the largest and most liquid companies based on market capitalization and trading volume. Over the trailing 10-year period, SMH has delivered a 24.7% annualized return while charging a reasonable 0.35% expense ratio.
The ETF's top holdings are a "who's who" of the industry. "SMH prominently features Nvidia Corp. (NVDA), renowned for its graphics processing units, or GPUs," Frasse says. "SMH also includes ASML Holding NV (ASML), the dominant supplier of ultraviolet lithography systems essential for manufacturing chips, and holds Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), the world's largest contract chipmaker."
Re: Best Semiconductor ETFs
VanEck Fabless Semiconductor ETF (SMHX)
"The semiconductor industry continues to evolve rapidly, driven notably by fabless companies that prioritize chip design and innovation while outsourcing production," Frasse explains. "This model allows firms like Nvidia to invest heavily in research and development, keeping capital expenditures low and maintaining agility in responding to market shifts." To focus on fabless firms, consider SMHX.
SMHX's portfolio features numerous U.S.-listed, fabless chip designers. In addition to Nvidia, investors get exposure to competitors Broadcom Inc. (AVGO), Qualcomm Inc. (QCOM) and Advanced Micro Devices Inc. (AMD). By avoiding foundries like TSM and photolithography systems manufacturers like ASML, SMHX may help semiconductor investors reduce supply chain and geopolitical risks.
"The semiconductor industry continues to evolve rapidly, driven notably by fabless companies that prioritize chip design and innovation while outsourcing production," Frasse explains. "This model allows firms like Nvidia to invest heavily in research and development, keeping capital expenditures low and maintaining agility in responding to market shifts." To focus on fabless firms, consider SMHX.
SMHX's portfolio features numerous U.S.-listed, fabless chip designers. In addition to Nvidia, investors get exposure to competitors Broadcom Inc. (AVGO), Qualcomm Inc. (QCOM) and Advanced Micro Devices Inc. (AMD). By avoiding foundries like TSM and photolithography systems manufacturers like ASML, SMHX may help semiconductor investors reduce supply chain and geopolitical risks.
Re: Best Semiconductor ETFs
iShares Semiconductor ETF (SOXX)
"When looking for semiconductor ETFs, investors should consider factors such as the expense ratio, the underlying index or benchmark, the fund's holdings and diversification strategy, and the ETF's historical performance," August says. "It is also important to assess the fund's liquidity and trading volume to ensure that it is easy to buy and sell." For a viable alternative to SMH, consider SOXX.
This ETF tracks 30 of the largest U.S.-listed semiconductor companies as represented by the NYSE Semiconductor Index. The ETF shares 23 overlapping holdings with SMH, but underweights NVDA and TSM. It is very liquid thanks to a low 0.03% 30-day bid-ask spread and also features an options chain for investors interested in buying or selling calls and puts. SOXX charges a 0.35% expense ratio.
"When looking for semiconductor ETFs, investors should consider factors such as the expense ratio, the underlying index or benchmark, the fund's holdings and diversification strategy, and the ETF's historical performance," August says. "It is also important to assess the fund's liquidity and trading volume to ensure that it is easy to buy and sell." For a viable alternative to SMH, consider SOXX.
This ETF tracks 30 of the largest U.S.-listed semiconductor companies as represented by the NYSE Semiconductor Index. The ETF shares 23 overlapping holdings with SMH, but underweights NVDA and TSM. It is very liquid thanks to a low 0.03% 30-day bid-ask spread and also features an options chain for investors interested in buying or selling calls and puts. SOXX charges a 0.35% expense ratio.
Re: Best Semiconductor ETFs
Invesco PHLX Semiconductor ETF (SOXQ)
"While certain segments of the semiconductor market, like memory, may be facing pressure due to oversupply concerns, the longer-term growth potential driven by advancements in AI, autonomous driving and high-performance computing remains strong," says Rene Reyna, head of thematic and specialty product ETF strategy at Invesco. For semiconductor exposure, Invesco offers SOXQ.
This ETF tracks the PHLX Semiconductor Sector Index, a longstanding benchmark that has been around since 1993. SOXQ's portfolio features a high overlap with SMH and SOXX, along with similar historical performance. However, it offers one notable advantage when it comes to fees. At a lower 0.19% expense ratio, SOXQ is significantly cheaper for long-term, buy-and-hold investors.
"While certain segments of the semiconductor market, like memory, may be facing pressure due to oversupply concerns, the longer-term growth potential driven by advancements in AI, autonomous driving and high-performance computing remains strong," says Rene Reyna, head of thematic and specialty product ETF strategy at Invesco. For semiconductor exposure, Invesco offers SOXQ.
This ETF tracks the PHLX Semiconductor Sector Index, a longstanding benchmark that has been around since 1993. SOXQ's portfolio features a high overlap with SMH and SOXX, along with similar historical performance. However, it offers one notable advantage when it comes to fees. At a lower 0.19% expense ratio, SOXQ is significantly cheaper for long-term, buy-and-hold investors.
Re: Best Semiconductor ETFs
First Trust Nasdaq Semiconductor ETF (FTXL)
SMH, SOXX and SOXQ all employ variants of a market-cap-weighted strategy. Under this rule set, larger stocks receive greater emphasis in the index's portfolio. An alternative to market-cap weighting is FTXL, which tracks the Nasdaq U.S. Smart Semiconductor Index. This benchmark is an example of a fundamentals-weighted index that assesses factors other than just size and liquidity.
FTXL begins by screening semiconductor stocks based on three trailing metrics: return on assets, gross income and momentum. From there, the ETF eliminates the bottom quartile and weights the remaining 30 to 50 stocks based on their trailing-12-month cash flow, with a 0.5% and 8% minimum/maximum weight cap. However, this more sophisticated methodology comes at a higher 0.6% expense ratio.
SMH, SOXX and SOXQ all employ variants of a market-cap-weighted strategy. Under this rule set, larger stocks receive greater emphasis in the index's portfolio. An alternative to market-cap weighting is FTXL, which tracks the Nasdaq U.S. Smart Semiconductor Index. This benchmark is an example of a fundamentals-weighted index that assesses factors other than just size and liquidity.
FTXL begins by screening semiconductor stocks based on three trailing metrics: return on assets, gross income and momentum. From there, the ETF eliminates the bottom quartile and weights the remaining 30 to 50 stocks based on their trailing-12-month cash flow, with a 0.5% and 8% minimum/maximum weight cap. However, this more sophisticated methodology comes at a higher 0.6% expense ratio.
Re: Best Semiconductor ETFs
SPDR S&P Semiconductor ETF (XSD)
Most semiconductor ETFs tend to emphasize larger, more established companies. If you want to target the up-and-coming players, an ETF like XSD could do the trick. This ETF tracks the S&P Semiconductor Select Industry Index, which is equal weighted. This means that smaller semiconductor firms receive the same weighting as a giant like Nvidia whenever the index rebalances.
XSD's portfolio currently has 41 holdings. The top holdings of the ETF represent a snapshot of companies that have outperformed in between rebalancing cycles. Notably, Intel Corp. (INTC) is XSD's second-largest holding. Despite a dismal year of losses throughout 2024, Intel has rebounded with a 21% year-to-date return so far in 2025. The ETF charges 0.35%.
Most semiconductor ETFs tend to emphasize larger, more established companies. If you want to target the up-and-coming players, an ETF like XSD could do the trick. This ETF tracks the S&P Semiconductor Select Industry Index, which is equal weighted. This means that smaller semiconductor firms receive the same weighting as a giant like Nvidia whenever the index rebalances.
XSD's portfolio currently has 41 holdings. The top holdings of the ETF represent a snapshot of companies that have outperformed in between rebalancing cycles. Notably, Intel Corp. (INTC) is XSD's second-largest holding. Despite a dismal year of losses throughout 2024, Intel has rebounded with a 21% year-to-date return so far in 2025. The ETF charges 0.35%.
Re: Best Semiconductor ETFs
Direxion Daily Semiconductor Bull 3x Shares (SOXL)
Traders tend to screen for ETFs very differently than buy-and-hold investors. Instead of prioritizing low fees and higher diversification, short-term traders look for volatility and liquidity. SOXL is a semiconductor ETF that promises both. As a leveraged ETF, SOXL aims to deliver a daily return three times that of the NYSE Semiconductor Index, the same benchmark tracked by SOXX.
To achieve this exposure, SOXL uses derivatives. Specifically, the ETF augments long positions in semiconductor stocks with index swaps. However, this increases risk for investors. In addition to high volatility, SOXL's long-term performance can vary unpredictably due to the effects of compounding and volatility drag. The ETF is also fairly pricey, with a 0.75% expense ratio.
Traders tend to screen for ETFs very differently than buy-and-hold investors. Instead of prioritizing low fees and higher diversification, short-term traders look for volatility and liquidity. SOXL is a semiconductor ETF that promises both. As a leveraged ETF, SOXL aims to deliver a daily return three times that of the NYSE Semiconductor Index, the same benchmark tracked by SOXX.
To achieve this exposure, SOXL uses derivatives. Specifically, the ETF augments long positions in semiconductor stocks with index swaps. However, this increases risk for investors. In addition to high volatility, SOXL's long-term performance can vary unpredictably due to the effects of compounding and volatility drag. The ETF is also fairly pricey, with a 0.75% expense ratio.