Should You Invest in the iShares Expanded Tech-Software Sector ETF (IGV)?

Launched on 07/10/2001, the iShares Expanded Tech-Software Sector ETF (IGV) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Software segment of the equity market.

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.

Investor-friendly, sector ETFs provide many options 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 10, placing it in bottom 38%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $6.26 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 96.80% of the portfolio.

Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 8.87% of total assets, followed by Salesforce Inc (CRM) and Oracle Corp (ORCL).

The top 10 holdings account for about 60.07% of total assets under management.

Performance and Risk

So far this year, IGV return is roughly 2.18%, and it's up approximately 34.44% in the last one year (as of 05/27/2024). During this past 52-week period, the fund has traded between $64.60 and $88.40.

The ETF has a beta of 1.06 and standard deviation of 27.45% for the trailing three-year period, making it a high risk choice in the space. With about 119 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 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.

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 $321.48 million in assets, SPDR S&P Software & Services ETF has $372.35 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

Oracle Corporation (ORCL) : 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

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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