Launched on 03/13/2001, the iShares Expanded Tech Sector ETF (IGM) is a passively managed exchange-traded fund that aims to provide broad exposure to the equity market’s Technology – Broad segment.
Growing in popularity among both institutional and retail investors, passively managed ETFs stand out for their low costs, transparency, flexibility, and tax efficiency. These characteristics make them strong options for long-term investors.
Sector ETFs, like IGM, allow investors to gain diversified exposure to a wide range of companies within specific sectors, minimizing risk. Currently, the Technology – Broad sector ranks 1st among the 16 broad Zacks sectors, making it one of the top choices for investment.
Fund Overview
The fund is managed by BlackRock and has gathered over $5.52 billion in assets, positioning it as one of the largest ETFs targeting the Technology – Broad sector. IGM’s goal is to match the performance of the S&P North American Technology Sector Index before accounting for fees and expenses.
The S&P North American Expanded Technology Sector Index includes North American stocks from the technology sector along with select equities from the communication services and consumer discretionary sectors.
Understanding Costs
When evaluating an ETF’s performance, expense ratios play a critical role. A lower expense ratio can lead to significantly better long-term returns compared to higher-cost alternatives.
For IGM, the annual operating expenses are 0.41%, ranking it as one of the more cost-effective options in the market.
Furthermore, it offers a 12-month trailing dividend yield of 0.23%.
Sector Focus and Major Holdings
ETFs are known for providing diversified exposure, reducing the risk associated with individual stocks. Understanding a fund’s holdings before investing is crucial. Most ETFs, including IGM, offer transparency by regularly disclosing their holdings.
In IGM, approximately 78.20% of the portfolio is allocated to the Information Technology sector, followed by a significant portion in Telecommunications.
Among its top individual holdings, Meta Platforms Inc Class A (META) constitutes about 8.85% of total assets, with Apple Inc (AAPL) and Nvidia Corp (NVDA) also being prominent players. The top 10 holdings comprise roughly 53.80% of the total assets managed.
Performance and Risk Factors
As of 10/22/2024, the iShares Expanded Tech Sector ETF has seen a year-to-date growth of approximately 31.88%, and a remarkable increase of about 55.97% over the past 12 months. During the last 52 weeks, its trading range was between $60.98 and $99.18.
With a beta of 1.18 and a standard deviation of 26.57% over the trailing three years, IGM is considered a medium-risk investment. The ETF comprises about 286 holdings, further diversifying company-specific risks.
Alternative Investment Options
IGM holds a Zacks ETF Rank of 1 (Strong Buy), reflecting favorable expected returns, an attractive expense ratio, and solid momentum. This makes it an appealing choice for investors interested in the Technology ETFs space. However, there are also other ETFs worth considering.
The Technology Select Sector SPDR ETF (XLK) follows the Technology Select Sector Index, while the Vanguard Information Technology ETF (VGT) tracks the MSCI US Investable Market Information Technology 25/50 Index. XLK has $71.96 billion in assets, and VGT has $79.89 billion. Notably, XLK features an expense ratio of 0.09%, while VGT charges 0.10%.
Conclusion
For more insights about this ETF and others, explore products that fit your investment goals and stay updated on the latest ETF market trends through Zacks ETF Center.
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iShares Expanded Tech Sector ETF (IGM): ETF Research Reports
Apple Inc. (AAPL): Free Stock Analysis Report
NVIDIA Corporation (NVDA): 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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Zacks Investment Research
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
