{"url":"https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/","section":"academy","title":"Sector and theme funds: what they really add | ETFIQ","description":"See what a sector or theme ETF adds to a broad fund: more weight in fewer companies and bigger swings, shown with real overlap and return data.","as_of":"Nov 10, 2026","structured_data":[{"@type":"LearningResource","@id":"https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/#lesson","name":"Sector and theme funds: what they really add","description":"As of Nov 10, 2026, 78.8% of SMH's money was in S&P 500 companies, yet it shared only 19% of its weight with VOO.","url":"https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/","learningResourceType":"Lesson","teaches":"What a sector or theme fund adds to a broad fund: more weight in fewer companies, shared names counted by the smaller weight, and bigger swings","educationalLevel":"Beginner","timeRequired":"PT6M","inLanguage":"en","isAccessibleForFree":true,"isPartOf":{"@type":"Course","@id":"https://etfiq.com/academy/build-a-simple-portfolio/#course","name":"Build a Simple Portfolio","url":"https://etfiq.com/academy/build-a-simple-portfolio/"},"position":4,"dateModified":"2026-11-10","author":{"@type":"Organization","name":"ETFIQ Research","url":"https://etfiq.com"},"publisher":{"@type":"Organization","name":"ETFIQ Research","url":"https://etfiq.com"}},{"@type":"FAQPage","@id":"https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/#check","mainEntity":[{"@type":"Question","name":"78.8% of SMH is in S&P 500 companies, but its overlap with VOO is only 19%. Why?","acceptedAnswer":{"@type":"Answer","text":"SMH weights the shared companies much more heavily than VOO does. Overlap counts only the smaller weight per company, so SMH's extra weight in chip makers is not shared."}},{"@type":"Question","name":"A broad fund holds a company at 5%. A theme fund holds it at 20%. You put $8,000 in the broad fund and $2,000 in the theme fund. What share of your whole $10,000 is in that company?","acceptedAnswer":{"@type":"Answer","text":"8%. $8,000 \u00d7 5% = $400; $2,000 \u00d7 20% = $400; $800 of $10,000 is 8%."}},{"@type":"Question","name":"What does adding a theme fund to a broad fund usually do?","acceptedAnswer":{"@type":"Answer","text":"Raises the weight of a few companies and your swings. Theme funds hold few companies at high weights."}}]},{"@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"ETFIQ","item":"https://etfiq.com/"},{"@type":"ListItem","position":2,"name":"Academy","item":"https://etfiq.com/academy/"},{"@type":"ListItem","position":3,"name":"Build a Simple Portfolio","item":"https://etfiq.com/academy/build-a-simple-portfolio/"},{"@type":"ListItem","position":4,"name":"Sector and theme funds","item":"https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/"}]},{"@type":"WebPage","name":"Sector and theme funds: what they really add","description":"See what a sector or theme ETF adds to a broad fund: more weight in fewer companies and bigger swings, shown with real overlap and return data.","url":"https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/","dateModified":"2026-11-10","isPartOf":{"@type":"WebSite","name":"ETFIQ","url":"https://etfiq.com"},"speakable":{"@type":"SpeakableSpecification","cssSelector":[".lede"]},"publisher":{"@id":"https://etfiq.com/#org"}}],"characters":5845,"truncated":false,"content":"ETFIQ / Academy / Build a Simple Portfolio / Sector and theme funds \n \n Sector and theme funds: what they really add\n Data as of Nov 10, 2026. Rebuilt every trading night.\n As of Nov 10, 2026 , 78.8% of SMH's money was in S&P 500 companies, yet it shared only 19% of its weight with VOO.\n Build a Simple Portfolio \u00b7 Lesson 4 of 6 1 2 3 4 5 6 \n Set an amount. See how much sits in NVIDIA with all VOO, a 90/10 mix, or all SMH. Amount $10,000 On $10,000: All VOO $840, 90% VOO, 10% SMH $945, All SMH $1,891. Hypothetical amounts. NVIDIA weights as of Nov 10, 2026. Step 1: the surprise. 78.8% of SMH's money is in S&P 500 companies. Yet their overlap by weight ( lesson 2 ) is just 19% . Why so low? Step 2: weight, not names. Take NVIDIA. It is 18.91% of SMH and 8.40% of VOO. Only the smaller weight, 8.40% , counts as shared. The other 10.51 points are extra NVIDIA that VOO does not give you. The same happens down the list: Broadcom is 5.90% of SMH and 2.54% of VOO. Most of what makes SMH different is how heavily it weights chip makers , plus a few non-US ones VOO cannot hold, like Taiwan Semiconductor Manufacturing (TSMC) at 9.83% . Step 3: what it does to your mix (hypothetical). Put $9,000 in VOO and $1,000 in SMH. NVIDIA through VOO: $9,000 \u00d7 8.40% = $756 NVIDIA through SMH: $1,000 \u00d7 18.91% = $189 Total: $945 of $10,000 = 9.45% in one company, up from 8.40% with all $10,000 in VOO. Step 4: swings both ways. More weight in one industry means bigger moves: \n The question\n I already own a broad fund. If I add a fund on a theme I believe in, like chips or robots, what am I actually adding?\n The idea\n A sector fund holds one part of the economy, such as technology or energy. A theme fund holds companies tied to an idea, such as semiconductors (computer chips) or cybersecurity. Many of their companies are already in a broad fund like the S&P 500.\n So a theme fund mostly does not add new companies. It adds weight to a few companies you may already own. That raises the effect any one of them has on your money, in both directions.\n Worked example\n The 4 steps beside the drawing at the top work this through on ETFIQ data. Point at a step to light the part of the drawing it describes.\n SMH is VanEck's semiconductor ETF. VOO is Vanguard's S&P 500 fund. Here are the facts from ETFIQ's SMH vs VOO page, as of Nov 10, 2026 . (SMH is an example, not advice.)\n SMH VOO \n Companies held 25 505 \n Top 10 share (money in its ten largest) 70% 39.1% \n Money in S&P 500 companies 78.8% 99.8% \n NVIDIA's weight 18.91% 8.40% \n Year to Nov 10, 2026 : SMH +35.21% , VOO +11.34% \n Month to Nov 10, 2026 : SMH \u221219.84% , VOO \u22123.65% \n Worst fall ( lesson 1 ) since December 2011 : SMH \u221244.24% , VOO \u221231.78% \n The big year and the big falls came from the same concentration.\n The common mistake\n \"A theme fund diversifies me because it's a different fund.\" Usually the reverse. It holds fewer companies, at heavier weights, many of which your broad fund already owns. That is a concentrated bet on one industry. It may be what you want, but call it that.\n A second mistake is judging a theme fund on its best year. Read its worst fall and a bad month next to it.\n Check your understanding\n Pick an answer to see why. Two of three right passes the lesson.\n 1. 78.8% of SMH is in S&P 500 companies, but its overlap with VOO is only 19% . Why? A ETFIQ's data is wrong B SMH weights the shared companies much more heavily than VOO does C SMH holds more companies than VOO D Overlap leaves out large companies Answer: B. SMH weights the shared companies much more heavily than VOO does. Overlap counts only the smaller weight per company, so SMH's extra weight in chip makers is not shared. Not C: SMH holds 25 companies to VOO's 505 . 2. A broad fund holds a company at 5%. A theme fund holds it at 20%. You put $8,000 in the broad fund and $2,000 in the theme fund. What share of your whole $10,000 is in that company? A 5% B 8% C 12.5% D 25% Answer: B. 8%. $8,000 \u00d7 5% = $400; $2,000 \u00d7 20% = $400; $800 of $10,000 is 8%. Not C: averaging 5% and 20% ignores how much money went to each. 3. What does adding a theme fund to a broad fund usually do? A Spreads your money over many more companies B Raises the weight of a few companies and your swings C Removes the risk of the broad fund D Lowers your fees Answer: B. Raises the weight of a few companies and your swings. Theme funds hold few companies at high weights. Not A: most of their companies are often already in the broad fund. \n Takeaways\n A theme fund adds weight, not usually new names: check its overlap by weight with what you own. \n Work out your total weight in the biggest shared company before adding a theme fund. \n Read a theme fund's worst fall beside its best year. \n Do it on ETFIQ\n Check any theme fund against the S&P 500 \n Where to next\n Next lesson: How to compare two funds on the facts Previous lesson: What a benchmark is, and how to pick the right one Build a Simple Portfolio: all lessons The explainer behind this lesson ETFIQ Academy How ETFIQ computes these numbers \n Cite this page. ETFIQ, Sector and theme funds: what they really add, data as of Nov 10, 2026. https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/ Free to use with attribution for data ETFIQ computes; issuer data stays under its owner's terms. The underlying files are at Open data .\n Other forms Plain ETFIQ, Sector and theme funds: what they really add, data as of Nov 10, 2026. https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/ APA ETFIQ. (Nov 10, 2026). Sector and theme funds: what they really add. Retrieved from https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/ Markdown [Sector and theme funds: what they really add (ETFIQ, Nov 10, 2026)](https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/)","source":"ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.","publisher":{"@id":"https://etfiq.com/#org","name":"ETFIQ","url":"https://etfiq.com"},"license":"https://etfiq.com/license/","license_text":"Data ETFIQ computes is free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.","citation":"ETFIQ, Sector and theme funds: what they really add, data as of Nov 10, 2026. https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/"}