VanEck Semiconductor ETF lets one stock reach a fifth of the fund

VanEck Semiconductor ETF SMH had $64.52 billion in net assets on Nov. 2, and Nvidia was 20.52% of them, past the 20% line the index draws when it resets weights.

The fund seeks to replicate, before fees and expenses, the MVIS US Listed Semiconductor 25 Index. VanEck's fact sheet says MarketVector Indexes, a wholly owned subsidiary of VanEck, owns that index. Each company's starting weight is the market value of the shares available to trade.

The 20% cap

MarketVector's index guide, from September 2026, applies the caps when the weights are reset, not on the days in between.

The index splits companies into one group that can take a larger share of the fund and a second group made up of everyone else. Only a company with more than half its revenue from making semiconductors or semiconductor equipment can enter the first group. That group includes every one of those companies above 4.5%, always at least the five largest of them and never more than the ten largest.

The group is capped at 50% of the index. No company in the group may be set above 20% or below 5%. Every other company is capped at 4.5%. Companies with less than half their revenue from that work cannot together exceed 20%.

The weights are reset in March, June, September and December. The new weights take effect after the third Friday of those months. Until the next reset, share prices move the weights.

On Nov. 2, VanEck's holdings had already moved past the lines a reset would draw. Nvidia, at 20.52%, was above the 20% maximum. Micron was 4.61% and ASML was 4.51%. On a reset day that band is empty, because a company in the group is set to at least 5% and every other company is set to 4.5% or less.

Taiwan Semiconductor was 9.67%, so the two largest holdings together were 30.19% of the fund. Texas Instruments was 5.89% and Broadcom was 5.71%.

Market value does not put Texas Instruments above Broadcom. At midday on Nov. 3, a day later, Broadcom's market value was $1.58 trillion and Texas Instruments' was $287 billion. The index starts from the value of shares available to trade, then the caps change those weights, and share prices move them until the next reset.

How companies get in

A company needs at least half its revenue from making semiconductors or semiconductor equipment to enter the index. A company already in the index can stay with a quarter of its revenue from that work, but it cannot join the larger group unless more than half its revenue still comes from it. It also has to be listed in the United States. A foreign company gets in through its U.S.-listed shares, or through a depositary receipt, a U.S.-listed security that stands in for shares held abroad.

MarketVector takes the largest 50 that qualify and ranks each one twice, by the market value of shares available to trade and by trading volume over three months. The ranks are added. The 10 best combined ranks are selected, whether or not they are already in the index. The other 15 come from companies already in the index that rank 11th to 40th. The list is set in March and September. The index targets 25 companies.

On Sept. 30, VanEck's country table put 78.78% of net assets in the United States and 21.16% in five other countries: Taiwan 9.24%, the Netherlands 5.48%, South Korea 4.40%, the United Kingdom 1.13% and Switzerland 0.91%. Cash and other assets were 0.06%.

iShares Semiconductor ETF SOXX tracks the NYSE Semiconductor Index. Its prospectus, dated July 31, 2026, describes the index as the 30 largest U.S.-listed companies in the semiconductors industry. In the statement of additional information dated July 31, 2026, every company is capped at 8%, companies outside the five largest are capped at 4%, and depositary receipts together are capped at 10%. Those caps are applied when the list is set each September and when the weights are reset each quarter.

The expense ratio is 0.35%, the management fee in the summary prospectus dated Feb. 1, 2026. Other expenses are listed at zero.

The next weight reset, in December, is the next time the rules apply the 20% line. A move in Nvidia's shares moves SMH more than the same move in any other holding.