The SPDR S&P Semiconductor ETF (XSD) tracks the S&P Semiconductor Select Industry Index, utilizing a distinct equal-weighted methodology to provide broad access to the chip sector.
Unlike market-cap weighted competitors, this strategy mitigates concentration risk by preventing industry giants from dominating the portfolio, offering investors balanced exposure to small- and mid-cap companies across manufacturers, designers, and equipment providers.
However, for long-term Indian investors, XSD carries a critical structural risk: The US Estate Tax. If you hold US-domiciled assets (like XSD) and your portfolio value exceeds $60,000, the US government levies a 40% Estate Tax on the excess amount upon your death. This creates an unnecessary risk that can wipe out nearly half of the wealth intended for your heirs.
This blog gives you all the information you need about the top UCITS alternatives. While there are no strictly equal-weighted semiconductor UCITS ETFs available in Europe, the alternatives listed below use capped market-cap methodologies. This prevents one or two companies from dominating the fund and brings them closer to the diversified spirit of XSD without the estate tax risk.
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Why Indians are looking for UCITS alternatives to XSD
Indian investors are shifting to UCITS alternatives because they solve the tax risks and inefficiencies of US ETFs like XSD while providing similar exposure to the semiconductor industry.
- Estate Tax Protection: UCITS funds are typically domiciled in Europe (such as Ireland or Luxembourg). They are not considered "US-situs" assets, meaning they are 100% exempt from the 40% US Estate Tax.
- Tax Deferral (Accumulation): Unlike XSD, which forces taxable cash dividends on you, many UCITS funds offer "Accumulating" classes that reinvest dividends automatically. This reduces your tax liability in India and defers it until you sell the fund.
To learn more about UCITS ETFs and why Indian investors are choosing them, read our guide on UCITS ETFs.
Popular UCITS Alternatives for XSD
Because the SPDR S&P Semiconductor ETF (XSD) tracks an equal-weighted index of US semiconductor companies, it offers unique exposure by giving small and mid-cap chip companies the exact same weight as mega-caps like Nvidia.
Currently, there are no strictly equal-weighted semiconductor UCITS ETFs available in Europe. However, you can still get excellent pure-play semiconductor exposure. The top UCITS alternatives use capped market-cap methodologies to prevent one or two companies from dominating the fund. This brings them closer to the diversified spirit of XSD.
Here are the top three UCITS alternatives to XSD:
1. VanEck Semiconductor UCITS ETF
This is the largest, most liquid, and most popular semiconductor UCITS ETF in Europe, closely tracking the top 25 US-listed chip companies. Since Europe lacks a direct equal-weight semiconductor ETF like XSD, this VanEck fund is the premier alternative for pure-play semiconductor exposure.
Unlike the equal-weight US-only approach of XSD, this fund tracks the largest 25 US-listed semiconductor companies using a capped market-cap strategy. To prevent massive mega-caps like Nvidia from completely taking over the fund, it caps individual stock weights at 10%. Furthermore, because it tracks US-listed companies, it includes crucial foreign giants that trade via ADRs in the United States, such as Taiwan Semiconductor and ASML. This offers a highly concentrated but globally critical portfolio.
- Ticker: SMH (LSE) / VVSM (Xetra)
- Structure: Accumulating
- Expense Ratio: 0.35%
- Top Holdings: Nvidia, Taiwan Semiconductor (TSMC), Broadcom, ASML, Advanced Micro Devices (AMD)
2. iShares MSCI Global Semiconductors UCITS ETF
This option provides much broader global diversification across the entire supply chain compared to the strict domestic US focus of XSD.
XSD restricts itself entirely to US companies, which means it completely misses out on the international linchpins of the semiconductor supply chain, such as the foundries in Asia and the lithography equipment builders in Europe. This iShares ETF solves that by tracking a globally diversified index of over 250 semiconductor companies worldwide. While it uses a capped market-cap methodology to comply with European UCITS diversification rules rather than the equal-weight methodology of XSD, it casts a much wider net. It captures everything from US designers to the international manufacturers that actually build the chips.
- Ticker: SEMI (LSE) / SEC0 (Xetra)
- Structure: Accumulating
- Expense Ratio: 0.35%
- Top Holdings: Nvidia, Taiwan Semiconductor (TSMC), ASML, Broadcom, Applied Materials
3. Amundi MSCI Semiconductors ESG Screened UCITS ETF
This ETF provides broad global semiconductor exposure while incorporating ESG screening and a capped market-cap methodology to prevent extreme single-stock concentration.
As a robust alternative to XSD, this Amundi ETF tracks the MSCI ACWI Semiconductors & Semiconductor Equipment ESG Filtered Index. Instead of a purely domestic US focus, it provides a globally diversified basket of chip stocks. Like the other UCITS alternatives, it utilizes a capped market-cap methodology to comply with European diversification rules. This spreads the weight more evenly than a pure market-cap index would, while filtering out companies that do not meet strict ESG criteria.
- Ticker: CHIP (LSE) / CHIP (Xetra)
- Structure: Accumulating
- Expense Ratio: 0.35%
- Top Holdings: Nvidia, Taiwan Semiconductor (TSMC), ASML, Broadcom, Texas Instruments
Invest in UCITS ETFs with Paasa
Paasa is a global investing platform designed for Indian investors. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore.
This means you are not restricted to just US ETFs like XSD; 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 specifically for Indian residents:
- Schedule FA Reporting: Exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- Tax Filing & Advice: Access to expert tax advice and seamless filing support.
- FEMA & LRS Integration: 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.
