The VanEck Semiconductor ETF posted a 48.7% total return in 2025, nearly tripling the performance of the S&P 500 over the same period. This marked the ETF’s strongest annual advance since its inception, driven by surging demand for chips used in artificial intelligence and accelerated computing. Trading volume averaged 166,000 shares per day during the year, underscoring robust investor interest in diversified exposure to the semiconductor sector.

Despite representing just over 20% of the portfolio at each quarterly rebalance, the largest holding delivered a 38.9% gain—underperforming the ETF’s overall return. The greatest single stock contributor was a major memory-chip manufacturer, which soared 240.2% including dividends, climbing to the fund’s fourth-largest stake. Other leading positions delivered double-digit gains: the premier foundry rose 55.9%, a leading communications-chip designer added 50.7%, and a prominent CPU and GPU maker jumped 77.3%. Market-cap weighting constraints required SMH to sell into strength to maintain sector balance.

Since its 2011 launch, SMH has averaged nearly 31% annual returns over the past decade, outperforming the Nasdaq-100 ETF’s 19% average over the same span. Investors who remained invested through downturns absorbed a 34% loss in 2022 but recouped those declines with gains in subsequent years. The ETF’s expense ratio stands at 0.35%, below the 0.44% average for actively managed funds, offering cost-conscious investors a compelling vehicle for long-term participation in the semiconductor industry’s growth trajectory.