If you’re interested in broader exposure to the technology-software sector of the stock market, look no further than iShares Expanded Technology Software Sector ETF (IGV), a passively managed exchange-traded fund founded on July 10, 2001. No need to look.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency. These are also great instruments for long-term investors.
Sector ETFs are also convenient funds, offering many ways to gain low-risk, diversified exposure to a broad group of companies in a particular sector. Technology – Software is one of 16 broad Zacks sectors within the Zacks Industry classification. It currently ranks 5th and is in the top 31%.
Index details
This fund is sponsored by BlackRock. The company has amassed more than $7.53 billion in assets, making it one of the largest ETFs that seeks to match the performance of the technology and software sector of the stock market. IGV seeks to match the performance of the S&P North American Technology Software Index, excluding fees and expenses.
The S&P North America Expanded Technology Software Index is comprised of North American stocks from the software industry and a selection of North American stocks from the interactive home entertainment, interactive media, and services industries.
cost
Investors should also pay attention to the ETF’s expense ratio. Assuming all other metrics are the same, a low-cost product will give better results than a high-cost product.
This ETF has an annual operating cost of 0.41%, making it one of the cheapest products in the space.
The dividend yield after 12 months is 0.01%.
Sector exposure and top holdings
While ETFs offer diversified exposure and thus minimize single-stock risk, it’s still important to closely examine a fund’s holdings before investing. Most ETFs are highly transparent products, with many disclosing their holdings on a daily basis.
This ETF has the highest allocation to the Information Technology sector, approximately 97.10% of its portfolio.
Looking at individual holdings, Salesforce Inc (CRM) accounts for about 9.02% of total assets, followed by Microsoft Corp (MSFT) and Intuit Inc (INTU).
The top 10 holdings account for approximately 58.53% of total assets under management.
performance and risk
The ETF’s return so far this year is about 5.99%, and it’s up about 50.54% over the past year (as of March 25, 2024). Over the past 52 weeks, the stock has traded between $57.51 and $88.40.
This ETF has a trailing three-year beta of 1.06 and a standard deviation of 27.69%, making it a high-risk choice in this space. Approximately 122 holdings allow us to effectively diversify company-specific risks.
Alternative proposal
The IShares Expanded High-Tech Software Sector ETF holds a Zacks ETF Rank #1 (Strong Buy), which is based on factors such as the asset class’s expected return, expense ratio, and momentum. This makes IGV an excellent choice for investors seeking exposure to the technology ETF segment of the market. There are additional ETFs in this space that investors can consider.
Invesco AI and Next Gen Software ETF (IGPT) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID and SPDR S&P Software & Services ETF (XSW) tracks S&P Software & Services Select Industry Index. The Invesco AI and Next Generation Software ETF has $275.35 million in assets, and the SPDR S&P Software & Services ETF has $387.15 million. IGPT’s expense ratio is 0.60% and XSW’s commission is 0.35%.
conclusion
To learn more about this and other ETFs, find products that fit your investment objectives, and read articles about the latest developments in the world of ETF investing, visit the Zacks ETF Center.
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iShares Enhanced Technology Software Sector ETF (IGV): ETF Research Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Salesforce Inc. (CRM): Free Stock Analysis Report
Intuit Inc. (INTU): Free Stock Analysis Report
SPDR S&P Software & Services ETF (XSW): ETF Research Report
Invesco AI and Next Generation Software ETF (IGPT): ETF Research Report
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