Should You Invest in the iShares Expanded Tech-Software Sector ETF (IGV)?
If you're interested in broad exposure to the Technology - Software segment of the equity market, look no further than the iShares Expanded Tech-Software Sector ETF (IGV), a passively managed exchange traded fund launched on 07/10/2001.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many 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 5, placing it in top 31%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $7.53 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.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
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
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 97.10% of the 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 about 58.53% of total assets under management.
Performance and Risk
The ETF return is roughly 5.99% so far this year and was up about 50.54% in the last one year (as of 03/25/2024). In that past 52-week period, it has traded between $57.51 and $88.40.
The ETF has a beta of 1.06 and standard deviation of 27.69% 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.
Alternatives
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) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID and the SPDR S&P Software & Services ETF (XSW) tracks S&P Software & Services Select Industry Index. Invesco AI and Next Gen Software ETF has $275.35 million in assets, SPDR S&P Software & Services ETF has $387.15 million. IGPT has an expense ratio of 0.60% and XSW charges 0.35%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
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 Reports
Invesco AI and Next Gen Software ETF (IGPT): ETF Research Reports
