A sector ETF can own dozens of companies and still behave like a concentrated portfolio. A June 30, 2026 filing cited by 24/7 Wall St. put Nvidia at 17.55% of the VanEck Semiconductor ETF, or about $87,750 of a $500,000 position.
Taiwan Semiconductor Manufacturing was the second-largest holding at 9.29%, equal to roughly $46,450 on the same investment. The top five positions represented 43.88% of the fund, or about $219,400.
What diversification does and does not mean
SMH spreads exposure across chip designers, foundries and equipment suppliers, but its weighting method allows the largest companies to dominate. That can be desirable when industry leadership is concentrated in a few firms. It can also amplify a reversal in the market's most popular holdings.
The exact numbers change daily as prices move and the fund rebalances. VanEck's U.S. page showed Nvidia at 22.42% in a September 10, 2026 holdings snapshot, illustrating how quickly the exposure can drift from a quarter-end filing. Investors should use current holdings for allocation decisions rather than treating an older percentage as permanent.
Concentration has been a source of strength while Nvidia and other AI-linked chip companies have led the market. Yet it means SMH is not an equal-weighted survey of the semiconductor industry. Smaller companies have limited influence on returns even if the fund technically owns them.
A position-sizing question
The cleanest test is to translate fund weights into dollars. An investor comfortable with a $500,000 SMH allocation should also be comfortable with the effective Nvidia position embedded inside it. The same calculation should be repeated for Taiwan Semiconductor and the other largest holdings.
SMH can still provide useful industry exposure, but the ticker does not remove single-company risk. Before buying, investors should check the latest holdings, top-five concentration and overlap with Nvidia or other chip stocks already owned elsewhere in the portfolio.