The Best Semiconductor ETF to Invest $500 in Right Now: September 2025’s Top Pick

Semiconductor ETFs surge as AI demand outstrips supply—again.

Why $500 hits the sweet spot

Forget stock-picking headaches. ETFs bundle top chipmakers into one trade. Nvidia, AMD, TSMC—all in. No single-company risk. Just pure semiconductor exposure.

The top contender right now

One fund dominates flows. Tracks the PHLX Semiconductor Sector Index. Holds 30 companies. Heavyweights get weighted heavier. It’s liquid. It’s cheap. Expense ratios matter—every basis point saved compounds. (Unlike some fund managers' excuses.)

Timing the tech tide

AI isn’t slowing. Data centers need more chips. Cars need more chips. Your fridge probably needs a chip. Demand cycles are stretching—supply struggles to keep up. This ETF rides that wave without betting the farm on one player.

Deploy that $500

Buy the dip? Maybe. But time in the market beats timing the market. Especially when semiconductors are the new oil—everyone needs ’em, few understand ’em. Just don’t expect your financial advisor to explain it before their next golf game.

Meet the iShares Semiconductor ETF

The iShares Semiconductor ETF has a lot going for it. Perhaps the best thing about the ETF is its performance in recent years. Check it out:

iShares Semiconductor ETF

Average Annual Gain

Data source: Morningstar.com, as of Sept. 11, 2025.

Those are robust returns. There's no guarantee that they will be similar over the next few years, but over the long run, it's hard to believe that semiconductor business won't, in general, thrive.

If you invest, say, $10,000 per year in this ETF and it gains, say, 17% annually, you'll end up with a stake worth around $82,000 after five years, $262,000 after 10 years, and $1.5 million after 15 years. (Again, your investment could average higher or lower annual returns than 17%.)

Image source: Getty Images.

Another big plus for this ETF is its low expense ratio (annual fee) of just 0.34%, meaning that you'll be charged a whopping $34 per year for every $10,000 you have invested in the fund.

What's in the iShares Semiconductor ETF?

So just what will you own if you invest in the iShares Semiconductor ETF? Well, it's an index fund, tracking the-- which is made up of U.S. semiconductor stocks. The ETF will usually have at least 80% of its money invested in that index's components and it's allowed to invest up to 20% in futures, options, swap contracts, cash, and cash equivalents.

The iShares Semiconductor ETF recently held 31 stocks; here are its top 10:

Holding

Weight in ETF

Data source: BlackRock.com, as of Sept. 11, 2025.

Interestingly, the three companies I mentioned at the beginning of this article -- three of the best performers over the past decade -- are the recent top holdings of this ETF. While any money you invest in the ETF will be distributed across some 31 holdings, more than a quarter -- 26.9% -- was recently in just those top three stocks.

That could be good, bad, or irrelevant, depending on your viewpoint. You might like being overweighted in such strong performers, or you might prefer to have more weight given to smaller stocks. Or you might just want to own whichever stocks the managers of the index deem worthy of it.

So give this solid ETF some consideration for your long-term portfolio. Know that there are plenty of other very promising index ETFs out there, as well -- and other semiconductor ETFs, too.