SMH outperformed peers due to quarterly rebalancing and a 10% cap on individual holdings like Nvidia.
The VanEck Semiconductor ETF (SMH) surged 82.1% in the first half of 2026, driven by its diversified exposure to U.S.-listed semiconductor stocks. The ETF tracks the MarketVector U.S. Listed Semiconductor 10% Capped Screened Index, which limits any single holding to 10% of the portfolio and rebalances quarterly.
Unlike market-cap-weighted indices, SMH’s methodology reduced exposure to Nvidia, which underperformed the broader sector. The ETF’s top holdings, including Micron Technology and Advanced Micro Devices, benefited from the capped weighting structure.
The performance highlights the advantages of diversification in a volatile sector, particularly as semiconductor demand fluctuated in early 2026.