Categories: Exchange Traded Funds (ETFs)TechnologyTechnology StocksU.S. Investing

ETF Talk: Expanding Exposure to High-Quality Tech

The iShares Expanded Tech Sector ETF (NYSE Arca: IGM) tracks a market-cap-weighted index of U.S. and Canadian technology companies.

IGM offers a broad coverage of the North American technology sector. Aside from conventional technology stocks, the fund also includes tech-related stocks from other sectors — specifically internet retail companies.

While IGM is a North American fund, nearly all its assets are allocated to the United States. Seeking to provide a diversified exposure to the tech industry, its market-cap-weighted index caps each security’s weight at 8.5%. The index is reconstituted semi-annually and rebalanced quarterly.

Prior to Dec. 24, 2018, the fund was tracking the S&P North American Technology Index. The change in index was due to a new Communications Services sector developed at the end of 2018.

Source: www.stockcharts.com

The fund generally will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics substantially identical to the component securities of its index. A significant portion of the underlying index is represented by securities of companies in the technology industry or sector. It is non-diversified.

Top holdings in IGM include Apple, Inc. (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon.com (NASDAQ: AMZN), Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOGL), to name just a few of the mega-cap, tech-related stalwarts in this fund.

IGM has $2.5 billion in net assets and a 0.05% average spread. Its expense ratio is 0.40%, meaning it is relatively inexpensive to hold in relation to other exchange-traded funds. IGM share price currently trades around $311, giving it a 0.47% distribution yield.

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However, as with any opportunity, potential investors should conduct their own due diligence in deciding whether or not this fund fits their own individual investing needs and portfolio goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.