Should You Invest in the iShares Expanded TechSoftware Sector ETF (IGV)?
Designed to provide broad exposure to the Technology - Software segment of the equity market, the iShares Expanded TechSoftware Sector ETF (IGV) is a passively managed exchange traded fund launched on 07/10/2001.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $6.10 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 0.43%, making it one of the cheaper products in the space.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 93.20% of the portfolio.
Looking at individual holdings, Salesforce.com Inc (CRM) accounts for about 9.47% of total assets, followed by Microsoft Corp (MSFT) and Adobe Inc (ADBE).
The top 10 holdings account for about 51.63% of total assets under management.
Performance and Risk
Year-to-date, the iShares Expanded TechSoftware Sector ETF has added roughly 16.71% so far, and was up about 12.43% over the last 12 months (as of 12/28/2021). IGV has traded between $326.82 and $446.52 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 27.97% for the trailing three-year period, making it a high risk choice in the space. With about 124 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Expanded TechSoftware Sector ETF holds a Zacks ETF Rank of 2 (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 Dynamic Software ETF (PSJ) tracks Dynamic Software Intellidex Index and the SPDR S&P Software & Services ETF (XSW) tracks S&P Software & Services Select Industry Index. Invesco Dynamic Software ETF has $374.69 million in assets, SPDR S&P Software & Services ETF has $406.74 million. PSJ has an expense ratio of 0.56% 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 TechSoftware Sector ETF (IGV): ETF Research Reports
Microsoft Corporation (MSFT) : Free Stock Analysis Report
salesforce.com, inc. (CRM) : Free Stock Analysis Report
Adobe Inc. (ADBE) : Free Stock Analysis Report
SPDR S&P Software & Services ETF (XSW): ETF Research Reports
Invesco Dynamic Software ETF (PSJ): ETF Research Reports
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