Behind the video
SMH Review: The Growth ETF That Obliterated SCHG and VGT
Overall Thesis
SMH has delivered exceptional historical returns, and the host sees durable semiconductor demand from AI. However, its concentration and volatility make broader growth ETFs a better fit for his portfolio and most buy-and-hold investors.
Narratives
SMHVanEck Semiconductor ETFThe host admires SMH's historical outperformance and believes semiconductor demand has staying power. He nevertheless avoids the fund because of concentration risk and expects its volatility to magnify losses in a market downturn.
Key Arguments
- SMH substantially outperformed the compared growth ETFs over several historical periods.
- AI development and rising global demand support the semiconductor industry's operational outlook.
- The fund holds approximately 25 companies, with its top ten accounting for roughly 74% of assets.
- Its historical standard deviation was substantially higher than the broader growth funds and market benchmark.
- Historical risk-adjusted performance did not consistently surpass VGT despite higher absolute returns.
- The host considers the expense ratio relatively high for a passive long-term holding.
Risks acknowledged
- The host believes SMH has substantial staying power.
- Its valuation multiple was lower than he expected.
- Investors with strong semiconductor conviction may find it suitable within a balanced portfolio.
- Historical outperformance cannot be assumed to continue.
SCHGSchwab U.S. Large-Cap Growth ETFThe host favors SCHG as a diversified growth allocation and identifies it as an alternative to SMH for long-term investors. This is a portfolio-fit preference rather than an explicit forecast of future share-price gains.
Key Arguments
- Provides growth exposure across multiple sectors.
- The host owns SCHG and describes it as arguably the best all-around multisector growth ETF.
- Its broader composition better fits his allocation-based investing approach.
Risks acknowledged
- Its historical returns substantially lagged SMH.
- Other growth funds outperformed it over some comparison periods.
VGTVanguard Information Technology ETFVGT is the host's preferred technology fund because it combines substantial semiconductor exposure with other technology industries. He considers it comparatively conservative alongside SMH, while recognizing its own concentration and volatility.
Key Arguments
- Offers semiconductor exposure alongside broader technology holdings.
- Delivered strong historical returns with lower volatility than SMH in the presented comparison.
- The host already holds it and regards it as a suitable source of broader growth exposure.
Risks acknowledged
- SMH substantially exceeded VGT's historical absolute returns.
- VGT remains a concentrated technology-sector investment.
QQQMInvesco NASDAQ 100 ETFThe host names QQQM as a broader growth alternative to SMH for buy-and-hold investors. He uses QQQ in historical comparisons because it offers a longer performance history.
Key Arguments
- Recommended as an alternative offering broader growth exposure than a semiconductor-only fund.
- QQQ supplies the longer historical record needed for the video's comparisons.
Risks acknowledged
- The historical comparisons use QQQ rather than QQQM.
- SMH delivered substantially stronger historical returns over longer comparison periods.
Hedges & Caveats
- Past performance does not establish future returns.
- SMH concentrates exposure in one technology subsector and relatively few holdings.
- High volatility can amplify losses when markets decline.
- The host does not own SMH and prefers broader growth exposure.
- Investors choosing SMH should balance it with value holdings and maintain their allocations through downturns.
- The unusually strong historical bull market may make historical results misleading.