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The mechanism behind semiconductor ETF performance divergence is index construction, specifically how much weight a fund allows any single holding to carry.
Cap-weighted funds concentrate assets in the largest names, which amplifies gains when one company leads the group but creates drag when sector leadership spreads.
In 2026, leadership broadened across the semiconductor sector, and the iShares Semiconductor ETF (NASDAQ: SOXX) has beaten the VanEck Semiconductor ETF (NASDAQ: SMH) by roughly 20.4 percentage points year to date through August 4.
How the two books differ SMH is the larger, more widely held fund, built around concentrated exposure to the mega-cap semiconductor complex.
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