Should You Invest in the iShares U.S. Technology ETF (IYW)?
Sector ETF report for IYW
The iShares U.S. Technology ETF (IYW) was launched on 05/15/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Broad segment of the equity market.
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 are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. 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%.
The fund is sponsored by Blackrock. It has amassed assets over $10.24 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Broad segment of the equity market. IYW seeks to match the performance of the Dow Jones U.S. Technology Index before fees and expenses.
The Russell 1000 Technology RIC 22.5/45 Capped Index includes companies in the following sectors: software and computer services and technology hardware and equipment. The Index is capitalization-weighted and includes only companies in the technology industry of the Dow Jones U.S. Total Market Index.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.31%.
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 82.60% of the portfolio. Telecom and Industrials round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 17.07% of total assets, followed by Apple Inc (AAPL) and Alphabet Inc Class A (GOOGL).
The top 10 holdings account for about 61.75% of total assets under management.
Performance and Risk
So far this year, IYW return is roughly 39%, and is up about 35.74% in the last one year (as of 12/29/2021). During this past 52-week period, the fund has traded between $82.45 and $117.09.
The ETF has a beta of 1.07 and standard deviation of 27.67% for the trailing three-year period, making it a medium risk choice in the space. With about 155 holdings, it effectively diversifies company-specific risk.
IShares U.S. Technology 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, IYW 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 $52.54 billion in assets, Vanguard Information Technology ETF has $56.90 billion. XLK has an expense ratio of 0.12% and VGT charges 0.10%.
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.
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iShares U.S. Technology ETF (IYW): ETF Research Reports
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Alphabet Inc. (GOOGL): Free Stock Analysis Report
Vanguard Information Technology ETF (VGT): ETF Research Reports
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