If you're interested in broad exposure to the Technology - Software segment of the equity market, look no further than the iShares Expanded TechSoftware Sector ETF (IGV), a passively managed exchange traded fund launched on 07/10/2001.
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 8, placing it in top 50%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $3.97 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
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 0.40%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.01%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. 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 92.60% of the portfolio.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 8.63% of total assets, followed by Salesforce Inc (CRM) and Adobe Inc (ADBE).
The top 10 holdings account for about 53.61% of total assets under management.
Performance and Risk
Year-to-date, the iShares Expanded TechSoftware Sector ETF has lost about -29.93% so far, and is down about -35.67% over the last 12 months (as of 09/06/2022). IGV has traded between $257.24 and $446.52 in this past 52-week period.
The ETF has a beta of 1.05 and standard deviation of 32.13% for the trailing three-year period, making it a high risk choice in the space. With about 126 holdings, it effectively diversifies company-specific risk.