Designed to provide broad exposure to the Technology - Broad segment of the equity market, the iShares Expanded Tech Sector ETF (
IGM Quick Quote IGM - Free Report) is a passively managed exchange traded fund launched on 03/13/2001.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.
The fund is sponsored by Blackrock. It has amassed assets over $2.56 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Broad segment of the equity market. IGM seeks to match the performance of the S&P North American Technology Sector Index before fees and expenses.
The S&P North American Expanded Technology Sector Index comprises of North American equities in the technology sector and select North American equities from communication services to consumer discretionary sectors.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.40%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.32%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 77.60% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Amazon Com Inc (
AMZN Quick Quote AMZN - Free Report) accounts for about 9.52% of total assets, followed by Apple Inc ( AAPL Quick Quote AAPL - Free Report) and Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) . Performance and Risk
So far this year, IGM has lost about -32%, and is down about -32.11% in the last one year (as of 11/25/2022). During this past 52-week period, the fund has traded between $266.47 and $447.06.
The ETF has a beta of 1.14 and standard deviation of 31.28% for the trailing three-year period, making it a medium risk choice in the space. With about 337 holdings, it effectively diversifies company-specific risk.
IShares Expanded Tech Sector ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IGM is an excellent option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Technology Select Sector SPDR ETF (
XLK Quick Quote XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF ( VGT Quick Quote VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $41.30 billion in assets, Vanguard Information Technology ETF has $41.78 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%. Bottom Line
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