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Should You Invest in the iShares Expanded Tech Sector ETF (IGM)?

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Looking for broad exposure to the Technology – Broad segment of the equity market? You should consider the iShares Expanded Tech Sector ETF IGM, a passively managed exchange traded fund launched on 03/13/2001.

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.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $4.12 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

Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 0.24%.

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 79.50% of the portfolio, followed by Telecom.

Looking at individual holdings, Microsoft Corp MSFT accounts for about 9% of total assets, followed by Apple Inc AAPL and Nvidia Corp NVDA.

The top 10 holdings account for about 52.55% of total assets under management.

Performance and Risk

The ETF return is roughly 12.17% so far this year and was up about 57.21% in the last one year (as of 02/12/2024). In that past 52-week period, it has traded between $304.93 and $502.72.

The ETF has a beta of 1.18 and standard deviation of 26.07% for the trailing three-year period, making it a medium risk choice in the space. With about 281 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 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.

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 $63.78 billion in assets, Vanguard Information Technology ETF has $64.77 billion. XLK has an expense ratio of 0.10% 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.

Zacks Investment Research

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