Designed to provide broad exposure to the Technology - Software segment of the equity market, the iShares Expanded Tech-Software Sector ETF (
IGV Quick Quote IGV - Free Report) is a passively managed exchange traded fund launched on 07/10/2001.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Software is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
The fund is sponsored by Blackrock. It has amassed assets over $6.49 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Software segment of the equity market. IGV seeks to match the performance of the S&P North American Technology-Software Index before fees and expenses.
The S&P North American Expanded Technology Software Index comprises of North American equities in the software industry and select North American equities from interactive home entertainment and interactive media and services industries.
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 0.41%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.01%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 94% of the portfolio.
Looking at individual holdings, Adobe Inc (
ADBE Quick Quote ADBE - Free Report) accounts for about 9.60% of total assets, followed by Oracle Corp ( ORCL Quick Quote ORCL - Free Report) and Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) .
The top 10 holdings account for about 58.59% of total assets under management.
Performance and Risk
The ETF has added roughly 37.56% and is up about 29.51% so far this year and in the past one year (as of 09/18/2023), respectively. IGV has traded between $241.77 and $367.01 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 28.69% for the trailing three-year period, making it a high risk choice in the space. With about 122 holdings, it effectively diversifies company-specific risk.
IShares Expanded Tech-Software 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, IGV is a great 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.
Invesco AI and Next Gen Software ETF (
IGPT Quick Quote IGPT - Free Report) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID and the SPDR S&P Software & Services ETF ( XSW Quick Quote XSW - Free Report) tracks S&P Software & Services Select Industry Index. Invesco AI and Next Gen Software ETF has $170.18 million in assets, SPDR S&P Software & Services ETF has $307.73 million. IGPT has an expense ratio of 0.60% and XSW charges 0.35%. Bottom Line
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