Global Investing
Top UCITS Alternatives to SMH (VanEck Semiconductor ETF)
The VanEck Semiconductor ETF (SMH) tracks the MVIS US Listed Semiconductor 25 Index, providing concentrated exposure to the 25 largest and most liquid U.S.-listed semiconductor companies, making it a pure-play on chip production and AI infrastructure.
Abhighyan Sinha
The VanEck Semiconductor ETF (SMH) tracks the MVIS US Listed Semiconductor 25 Index, providing concentrated exposure to the 25 largest and most liquid U.S.-listed semiconductor companies.
Unlike broader technology funds, SMH operates as a pure-play on chip production and equipment, maintaining heavy allocations in industry leaders like NVIDIA and TSMC to capitalize on the infrastructure driving artificial intelligence and cloud computing.
However, for long-term Indian investors, SMH carries a critical structural risk: the US estate tax. If you hold US-domiciled assets like SMH and your holdings exceed $60,000, your estate faces US estate tax at progressive rates of up to 40% on your death. On a $500,000 holding, that works out to roughly 29% of the portfolio.
This blog gives you all the information you need about the top UCITS alternatives. Whether you prefer the European counterpart, which caps single holdings at 10%, or a broader global strategy covering the whole value chain, these funds provide a similar pure-play semiconductor focus without the risk of the US estate tax.
Table of contents
- Why Indians are looking for UCITS alternatives to SMH
- Popular UCITS alternatives for SMH
- Invest in UCITS ETFs with Paasa
Why Indians are looking for UCITS alternatives to SMH
Indian investors are shifting to UCITS alternatives because they solve the tax risks and inefficiencies of US ETFs like SMH while providing very similar exposure.
- Estate Tax Protection: UCITS funds are typically domiciled in Ireland. They are not considered "US-situs" assets, meaning they are 100% exempt from US Estate Tax.
- Tax Deferral (Accumulation): Unlike SMH, which forces taxable cash dividends on you, many UCITS funds offer "Accumulating" classes that reinvest dividends automatically. This defers your Indian tax liability until you sell the fund, and converts what would have been slab-rate dividend income into capital gains.
To learn more about UCITS ETFs and why Indian investors are choosing them, read our guide on UCITS ETFs.
Popular UCITS alternatives for SMH
Here are the top three UCITS funds that serve as the best proxies for semiconductor exposure.
1. VanEck Semiconductor UCITS ETF
This is the closest European counterpart to the US-listed SMH, managed by the same provider (VanEck) and holding a similar concentrated basket of 25 companies. It tracks the MVIS US Listed Semiconductor 10% Capped ESG Index, which is a nearly identical index of the 25 largest and most liquid US-listed semiconductor companies with the addition of an ESG screen.
However, there is a crucial difference: due to European UCITS diversification regulations, individual holdings are capped at 10%. The US version has no such cap and can hold a much larger weight in Nvidia, while this UCITS version caps Nvidia (and other giants) at 10% at each rebalance. This provides slightly better risk distribution across other major players like TSMC and Broadcom while maintaining a similar pure-play semiconductor focus.
- Ticker: SMH (LSE, USD) / VVSM (Xetra, EUR)
- Total Expense Ratio (TER): 0.35%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Nvidia, Taiwan Semiconductor (TSMC), Broadcom, ASML Holding, Advanced Micro Devices (AMD).
2. iShares MSCI Global Semiconductors UCITS ETF
Managed by the world's largest ETF provider (BlackRock/iShares), this fund offers significantly broader global exposure and includes companies from emerging markets. Unlike VanEck's SMH which focuses strictly on the 25 largest US-listed names, SEMI tracks a much broader global index and holds about 258 companies across developed and emerging markets (as of October 2026).
It captures the entire global semiconductor value chain, from chip designers in the United States to foundries and manufacturers in Asia. This is an excellent choice for investors who want wider diversification, exposure to smaller mid-cap chip companies, and less concentration risk in the top three to four mega-cap names. It uses an Accumulating (Acc) structure to efficiently reinvest dividends.
- Ticker: SEMI (LSE, GBP) / SEC0 (Xetra, EUR)
- Total Expense Ratio (TER): 0.35%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Nvidia, Broadcom, Taiwan Semiconductor (TSMC), ASML Holding, Applied Materials.
3. HSBC Nasdaq Global Semiconductor UCITS ETF
While the US SMH tracks the MVIS index, HNSC tracks the Nasdaq Global Semiconductor Index, a global benchmark that sits between the concentrated 25-stock VanEck fund and the much broader iShares SEMI.
Like the other options, it is accumulating, so the dividends these chip companies pay are reinvested inside the fund and your Indian tax is deferred until you sell.
- Ticker: HNSC (LSE, USD)
- Total Expense Ratio (TER): 0.35%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Nvidia, Broadcom, ASML Holding, Taiwan Semiconductor (TSMC), Advanced Micro Devices (AMD).
More UCITS alternatives: UCITS alternatives to XSD and UCITS alternatives to XLK.
Related: What are UCITS ETFs? and Should you switch from US ETFs to UCITS?
Invest in UCITS ETFs with Paasa
Paasa is a global investing platform designed for Indian residents and NRIs. We provide direct access to 11 markets: the US, Canada, the UK, Germany, France, Switzerland, the Netherlands, South Korea, Japan, Hong Kong and Singapore.
This means you are not restricted to just US ETFs like SMH; you can also buy tax-efficient UCITS equivalents using Paasa.
The compliance advantage
Paasa makes global investing easy and also removes the compliance friction with a specialized layer built for Indian residents and NRIs:
- Schedule FA reporting: Exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- FEMA & LRS guidance: Guidance on FEMA regulations and LRS limits to ensure compliance.
Whether you are buying direct US stocks or investing in UCITS ETFs listed on European exchanges, Paasa provides global access with India-specific compliance and tax support.
Frequently Asked Questions
Why doesn't the UCITS version of the VanEck Semiconductor ETF hold as much NVIDIA as the US version?
UCITS diversification rules cap any single holding at 10% at rebalancing, so the UCITS fund cannot let NVIDIA grow as large as the US SMH does. The result is similar exposure spread a little more evenly across names like Broadcom and TSMC.
Which SMH alternative is the most diversified?
The iShares MSCI Global Semiconductors UCITS ETF (SEMI) is, with about 258 holdings across developed and emerging markets. The VanEck fund holds 25 US-listed names, and HSBC's Nasdaq Global Semiconductor fund sits in between.
Are these SMH alternatives accumulating?
Yes. The VanEck, iShares and HSBC funds listed here all reinvest dividends, so you pay no Indian tax on dividends until you sell. All three charge 0.35% a year.
Can I switch from SMH to a UCITS alternative without paying tax?
No. Moving from SMH to a UCITS fund means selling SMH, and that sale is a taxable event in India. Gains on units held for more than 24 months are taxed as long-term capital gains at 12.5%, and gains on units held for 24 months or less are taxed at your income-tax slab rate. As a non-resident, you generally do not owe US capital gains tax on the sale.
How can I buy the VanEck Semiconductor UCITS ETF (SMH)?
You can buy it through your Paasa account: search for SMH, which trades on the London Stock Exchange in USD, and place a buy order.
How can I buy the iShares MSCI Global Semiconductors UCITS ETF (SEMI)?
You can buy it through your Paasa account: search for SEMI, which trades on the London Stock Exchange in GBP, and place a buy order.
How can I buy the HSBC Nasdaq Global Semiconductor UCITS ETF (HNSC)?
You can buy it through your Paasa account: search for HNSC, which trades on the London Stock Exchange in USD, and place a buy order.
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