Is it worth investing in the iShares Expanded Tech-Software Sector ETF (IGV)? – May 27, 2024

The iShares Expanded Tech-Software Sector ETF fund launched on October 7, 2001 (IGV – Free Report is a passively managed, listed fund that aims to provide broad exposure to the technology and software segment of the stock market.

While passively managed ETFs are a great tool for long-term investors, they 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 opportunities to gain low risk and diversified exposure to a wide range of companies in specific sectors. Technology – Software is one of the 16 broad Zacks Industry sectors. It currently ranks 10th, at a low of 38%.

Index details

The fund’s sponsor is Blackrock. It has accumulated assets of over $6.26 billion, making it one of the largest ETFs trying to match the performance of the Technology – Software segment in the stock market. IGV seeks to match the performance of the S&P North American Technology and Software Index before fees and expenses.

The S&P North American Expanded Technology Software Index includes North American software stocks and selected North American stocks in the interactive home entertainment and interactive media and services industries.

Costs

Because cheaper funds tend to outperform more expensive funds, all other factors being equal, it’s important for investors to pay attention to an ETF’s expense ratio.

The annual operating costs of this ETF are 0.41%, making it one of the cheaper products on the market.

Its trailing 12-month dividend yield is 0.01%.

Sector exposure and largest assets

It’s important to dive into an ETF’s holdings before investing, despite the many advantages of this type of fund, such as diversified exposure that minimizes the risk of a single stock. Most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the information technology sector at approximately 96.80% of the portfolio.

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

The 10 largest holdings account for approximately 60.07% of total assets under management.

Performance and risk

The return on IGV so far this year is approximately 2.18% and has increased by approximately 34.44% over the last year (as of May 27, 2024). Over the past 52 weeks, the fund has traded between $64.60 and $88.40.

The ETF has a beta of 1.06 and a standard deviation of 27.45% for the trailing three-year period, making it a high-risk pick in this space. Holding approximately 119 shares, it effectively diversifies company-specific risk.

Alternatives

The IShares Expanded Tech-Software Sector ETF carries a Zacks ETF Rank of 1 (Strong Buy), which is based on asset class expected return, expense ratio, and momentum, among other factors. For this reason, IGV is an excellent option for investors seeking exposure to the technology ETF market segment. There are other additional ETFs on the market that investors may also consider.

Invesco AI and next-generation ETF software (IGPT – Free Report) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID and the SPDR S&P Software & Services ETF (XSW – Free Report) tracks the S&P Software & Services Select Industry Index. The Invesco AI and Next Gen Software ETF has assets of $321.48 million and the SPDR S&P Software & Services ETF has assets of $372.35 million. IGPT has an expense ratio of 0.60% and XSW fees are 0.35%.

Bottom line

To learn more about this product and other ETFs, find products that match your investment goals, and read articles on the latest developments in the world of ETF investing, visit the Zacks ETF Center.

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