If you're interested in broad exposure to the Technology - Software segment of the equity market, look no further than the Invesco AI and Next Gen Software ETF (IGPT), a passively managed exchange traded fund launched on 06/23/2005.
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.
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 4, placing it in top 25%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $395.56 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Software segment of the equity market. IGPT seeks to match the performance of the STOXX WORLD AC NEXGEN SOFTWARE DEV ID before fees and expenses.
The STOXX World AC NexGen Software Development Index is comprised of companies with significant exposure to technologies or products that contribute to future software development through direct revenue.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
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 60.80% of the portfolio. Telecom and Healthcare round out the top three.
Looking at individual holdings, Meta Platforms Inc (META) accounts for about 9% of total assets, followed by Alphabet Inc (GOOGL) and Advanced Micro Devices Inc (AMD).
The top 10 holdings account for about 59.11% of total assets under management.
Performance and Risk
The ETF return is roughly 17.79% and was up about 36.62% so far this year and in the past one year (as of 10/08/2024), respectively. IGPT has traded between $30.45 and $49.76 during this last 52-week period.
The ETF has a beta of 1.02 and standard deviation of 22.89% for the trailing three-year period. With about 99 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco AI and Next Gen Software 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, IGPT 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.
SPDR S&P Software & Services ETF (XSW) tracks S&P Software & Services Select Industry Index and the iShares Expanded Tech-Software Sector ETF (IGV) tracks S&P North American Technology-Software Index. SPDR S&P Software & Services ETF has $363.33 million in assets, iShares Expanded Tech-Software Sector ETF has $6.75 billion. XSW has an expense ratio of 0.35% and IGV charges 0.41%.
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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Get it free >>Invesco AI and Next Gen Software ETF (IGPT): ETF Research Reports
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
SPDR S&P Software & Services ETF (XSW): ETF Research Reports
iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
