If you own SPDR S&P Semiconductor ETF (NYSEARCA:XSD) because you wanted “semiconductor exposure,” the fund’s 0.35% expense ratio is the least interesting number attached to your account. The real cost hides inside the word “equal-weight,” and over the past decade it has quietly drained hundreds of percentage points of return versus two funds with nearly identical fees.
What You’re Actually Paying in Fees
On the sticker, XSD looks cheap. The gross and net expense ratio both sit at 0.35%, which works out to $35 per year on a $10,000 position. Over 20 years, assuming a flat balance, that direct fee drag comes to roughly $700 of pure expense.
The problem is that XSD’s closest rivals cost about the same. iShares Semiconductor ETF (NASDAQ:SOXX) charges 0.34%, and VanEck Semiconductor ETF (NASDAQ:SMH) charges 0.35%. The trap is what you get for that fee.
The Part the Factsheet Doesn’t Highlight
XSD is a modified equal-weight fund. Its largest holding as of April 15, 2026 is Marvell Technology at 3.06%, followed by Power Integrations at 3.05%, Cirrus Logic at 2.98%, On Semiconductor at 2.91%, and Impinj at 2.89%. NVIDIA, Broadcom, and Taiwan Semiconductor, the names that actually powered the AI trade, are diluted down to roughly the same weight as a mid-cap analog chipmaker you may never have heard of.
That structural choice is the hidden cost. Compare it against SMH, where AMD sits at 10.33%, Broadcom at 9.57%, Micron at 9.39%, Taiwan Semi at 8.75%, and NVIDIA at 8.4%. When those mega-caps ran, SMH captured them. XSD did not.
The receipts are ugly. Over the past year, XSD returned 143.64%, while SOXX returned 169.68%. Stretch it out and the gap widens. XSD is up 233.71% over five years and 1,383.4% over ten years. SOXX is up 346.78% and 2,182.74% across those same periods. SMH is up 423.27% and 2,443.96%. That is a four-figure spread of missed return, and it costs the same 0.35% a year to sit through.
The Seeking Alpha bull case, published December 25, 2025, framed the equal-weight design as a feature: “The ETF’s modified equal-weight structure reduces single-stock risk, focusing on US SMID caps.” True. It also reduces single-stock reward when the largest chip stocks are the ones driving the cycle, which they have been.
The Cheaper Mirror
Two funds sit right next to XSD on the shelf. SOXX gives you a market-cap-weighted basket built on the NYSE Semiconductor Index at 0.34%, which is actually one basis point cheaper than XSD. SMH tracks the MarketVector US Listed Semiconductor 10% Capped Screened Index, holds $6,326.1M in total net assets, and puts most of the portfolio in the largest global chip names.
The trade-off is real. If you believe smaller-cap analog and specialty chip names will lead the next leg of the semi cycle, XSD’s design tilts you there. If you want the sector as most investors experience it, the cap-weighted funds have simply delivered more per dollar of fee.
What This Means for You
The question worth asking is whether you are paying 0.35% for the semiconductor exposure you actually want. XSD’s fee is competitive. Its structure is a bet, one that has cost holders meaningful ground against near-identical-priced peers over one, five, and ten years. Know which bet you are making before the next cycle decides it for you.
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