Looking for long-term winners in the technology space? Look no further than the iShares US Technology ETF (NYSEARCA:IYW). This $10.7 billion tech ETF of his is Blackrock (New York Stock Exchange:BLK) iShares has had double-digit annualized returns for years, and as of the most recent month-end, it boasted an annualized return of more than 20% over the past 10 years. So let’s take a closer look at this powerful tech ETF.
What is IYW ETF’s strategy?
IYW aims to provide investors with “targeted access to domestic technology stocks” by investing in US-based information technology, electronics, computer software and hardware companies.
IYW’s long-term track record
As explained above, IYW has achieved incredible results over the years. As of the end of August, IYW’s return over the past three years was 12.2% annually. Looking further ahead, his five-year return for this fund is even more impressive at 18.6% on an annualized basis. Over 10 years, IYW generated an impressive return of 20.2% on an annualized basis.
Cumulatively, IYW’s 10-year return was an impressive 544.2%, meaning that an investor who invested $10,000 in the fund 10 years ago would have $64,420 worth of shares at the end of August. This means that
These results certainly outperform those of the broader market over the same period. For example, the Vanguard S&P 500 ETF (NYSEARCA:VOO) has returned 10.5% annually over the past three years, 11.1% annually over the past five years, and 12.8% over the past 10 years.
At the same time, IYW’s performance is roughly on par with that of the Technology Select Sector SPDR ETF, some of the largest and most well-known tech ETFs on the market.NYSEARCA:XLK) and Invesco QQQ Trust (NASDAQ:QQQ). XLK’s annualized returns over the past 3, 5, and 10 years were 13.4%, 19.7%, and 20.5%, respectively, slightly outperforming IYW in each period.
IYW, on the other hand, slightly outperformed QQQ in each of the same time frames. QQQ’s annualized returns over the past 3, 5, and 10 years have been 9.3%, 16.0%, and 18.6%, respectively.
At the end of the day, these are all good ETFs, and IYW is right among them. Below is his comparison of IYW, QQQ, and XLK using his ETF comparison tool on TipRanks. This tool allows investors to compare their ETFs on a variety of customizable factors.
IYW Holdings
IYW has 137 stocks, giving it good diversification. However, the fund is highly concentrated with its top 10 holdings accounting for 63.2% of its assets. Below is a summary of his top 10 holdings for IYW using TipRanks’ holdings tool.
As you can see, the fund’s two largest holdings are Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) together account for more than one-third of the fund’s assets. Two classes of alphabets (NASDAQ:GOOG) (NASDAQ:Google) shares together account for more than 10% of the fund.
What I like about IYW’s holding group as a whole is that it provides investors with a good mix of exposure to all aspects of the technology space. Approximately 40.9% of IYW’s holdings fall into the Software and Services subsector, and 21.8% into Semiconductors and Semiconductor Equipment. A further 20.9% is classified as high-tech hardware and equipment, with media and entertainment accounting for 14.9% weight.
This allows investors to take advantage of everything the technology sector has to offer, even semiconductor giants like Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO), enterprise software providers such as Oracle (New York Stock Exchange:ORCL) and Salesforce (New York Stock Exchange:CRM), or multifaceted tech giants like Alphabet and Meta Platforms (Nasdaq:Meta).
To summarize, IYW’s top holdings are owners of some strong Smart Scores. Smart Score is a proprietary quantitative stock scoring system created by TipRanks. It gives stocks a score of 1 to 10 based on eight key market factors. A score of 8 or higher corresponds to an outperform rating. Seven of IYW’s top 10 stocks have a SmartScore of 8 or higher, led by his Nvidia and Broadcom with a “Perfect 10” SmartScore. IYW itself has an ETF Smart Score of 8, which equates to outperformance.
Is IYW stock a buy, according to analysts?
Turning to Wall Street, IYW has a Moderate Buy consensus rating, based on 109 Buy, 27 Hold, and 1 Sell ratings assigned over the past three months. IYW’s average price target of $126.63 implies an upside potential of 20.9%.
expense ratio
Other than the concentration of major holdings, IYW’s only real downside is its expense ratio. The 0.40% expense ratio is reasonable, but higher than comparable ETFs like the aforementioned QQQ and XLK (0.20% and 0.10%, respectively).
An investor who allocates $10,000 to IYW will pay $40 in fees and expenses in the first year of investment, while an investor who invests the same amount in QQQ will pay $20 and $10 if he invests $10,000 in XLK. It becomes.
All of these are reasonably priced, but IYW is the most expensive of the group. The price difference will also increase over time. Assuming each fund continues to earn 5% annually and maintains its current expense ratio, an IYW investor will pay $505 in fees over his 10 years. This compares to $128 for XLK investors and $255 for QQQ investors.
This may not be an important consideration if the fund is earning more than 20% on an annualized basis, but it is still something investors should be aware of.
Key points for investors
All in all, IYW is another top tech ETF that has proven to be a long-term winner. This fund has achieved an excellent annualized return of over 20% over the past 10 years and has generated significant long-term wealth for investors during that time.
The ETF also provides investors with broad exposure to all aspects of the U.S. technology sector, while earning an ETF Smart Score of 8, equivalent to Outperform, and a Moderate Buy rating from analysts. Masu. The only real drawback is the expense ratio, which, while reasonable, is higher than its larger competitors. Nevertheless, IYW’s long-term performance and proven track record make it a solid choice for investors to consider adding to their portfolios.
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