2024-06-08 03:15:00 ET
There shouldn't be any question about the investment objective of VanEck Semiconductor ETF (NASDAQ: SMH) . As its name clearly states, it invests in the semiconductor sector. So, by design, it isn't a particularly diversified exchange-traded fund (ETF), and that creates investment risk to factor into any buying decision.
But don't stop there -- there's one more diversification issue that you have to consider.
As already noted, VanEck Semiconductor ETF does exactly what its name implies and follows the semiconductor sector. The exchange-traded fund tracks the MVIS US Listed Semiconductor 25 . According to thematic market indexer Market Vector, this index "tracks the performance of the 25 largest and most liquid US exchange-listed companies in the semiconductor industry. This is a modified market cap-weighted index, and only includes companies that generate at least 50% of their revenue from semiconductors or semiconductor equipment."
For further details see:
VanEck Semiconductor ETF Is Riskier Than You Think