If you're interested in broad exposure to the Technology - Broad segment of the equity market, look no further than the iShares Expanded Tech Sector ETF (IGM), a passively managed exchange traded fund launched on 03/13/2001.
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.
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 - Broad 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 $5 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Broad segment of the equity market. IGM seeks to match the performance of the S&P North American Technology Sector Index before fees and expenses.
The S&P North American Expanded Technology Sector Index comprises of North American equities in the technology sector and select North American equities from communication services to consumer discretionary sectors.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 0.21%.
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 77.70% of the portfolio, followed by Telecom.
Looking at individual holdings, Apple Inc- (AAPL) accounts for about 8.62% of total assets, followed by Microsoft Corp- (MSFT) and Meta Platforms Inc Class A- (META).
The top 10 holdings account for about 53.66% of total assets under management.
Performance and Risk
The ETF has gained about 24.38% so far this year and it's up approximately 45.43% in the last one year (as of 08/19/2024). In that past 52-week period, it has traded between $60.98 and $98.62.
The ETF has a beta of 1.18 and standard deviation of 26.45% for the trailing three-year period, making it a medium risk choice in the space. With about 286 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Expanded Tech 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, IGM is an outstanding 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.
Technology Select Sector SPDR ETF (XLK) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $69.81 billion in assets, Vanguard Information Technology ETF has $74.80 billion. XLK has an expense ratio of 0.09% and VGT charges 0.10%.
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 >>iShares Expanded Tech Sector ETF (IGM): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Vanguard Information Technology ETF (VGT): 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.
