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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.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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 $4.47 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
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 0.43%, making it one of the cheaper products in the space.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 92.40% of the portfolio.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 9.02% of total assets, followed by Salesforce.com Inc (CRM) and Adobe Inc (ADBE).
The top 10 holdings account for about 51.18% of total assets under management.
Performance and Risk
So far this year, IGV has lost about -23.69%, and is down about -17.76% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $299.90 and $446.52.
The ETF has a beta of 1.03 and standard deviation of 30.09% for the trailing three-year period, making it a high risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.