# Sector and theme funds: what they really add

> 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.

Data as of Nov 10, 2026. Rebuilt every trading night.

## Sector and theme funds: what they really add

Data as of Nov 10, 2026. Rebuilt every trading night.

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.

Build a Simple Portfolio · Lesson 4 of 6 1 2 3 4 5 6

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 × 8.40% = $756 NVIDIA through SMH: $1,000 × 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:

### The question

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?

### The idea

- 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.

- 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.

### Worked example

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.

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.)

| | SMH | VOO |
| --- | --- | --- |
| Companies held | 25 | 505 |
| Top 10 share (money in its ten largest) | 70% | 39.1% |
| Money in S&P 500 companies | 78.8% | 99.8% |
| NVIDIA's weight | 18.91% | 8.40% |

- Year to Nov 10, 2026 : SMH +35.21% , VOO +11.34%

- Month to Nov 10, 2026 : SMH −19.84% , VOO −3.65%

- Worst fall ( lesson 1 ) since December 2011 : SMH −44.24% , VOO −31.78%

The big year and the big falls came from the same concentration.

### The common mistake

"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.

A second mistake is judging a theme fund on its best year. Read its worst fall and a bad month next to it.

### Check your understanding

Pick an answer to see why. Two of three right passes the lesson.

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 × 5% = $400; $2,000 × 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.

### Takeaways

- A theme fund adds weight, not usually new names: check its overlap by weight with what you own.

- Work out your total weight in the biggest shared company before adding a theme fund.

- Read a theme fund's worst fall beside its best year.

### Do it on ETFIQ

Check any theme fund against the S&P 500

### Where to next

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Source: ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.
Cite: 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/
Licence: https://etfiq.com/license/ Data ETFIQ computes is free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.
HTML: https://etfiq.com/academy/build-a-simple-portfolio/sector-and-theme-funds/