iShares S&P North Amer Tech-SoftwareIGV

Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough

Suitability
IShares S&P North American Technology-Software IGV offers investors exposure to software companies--specifically, companies that produce client/server, enterprise, Internet, PC, and entertainment software. As a subsector-specific Read more

Bull Case

Most of the firms in this fund have healthy balance sheets, which should support continued investment in R&D and growth strategies.

Large-cap software firms with significant competitive advantages (including high switching costs and steady maintenance revenues) serve as the cornerstone of the portfolio. In fact, wide and narrow economic-moat firms comprise about 33% and 36% of total assets, respectively.

Major players like Microsoft and Oracle have done a solid job shoring up their defenses and providing paths forward in a world of cloud computing and mobile devices. Read more

Bear Case

Between persistent higher unemployment rates, reduced government spending, and the possibility of the economic recovery stalling, there are factors aplenty out there that could hamper near-term IT spending.

Cloud computing is a disruptive force, and large software providers have had to develop new products that will likely cannibalize their legacy businesses.

Top holdings such as Intuit and Adobe face fairly mature markets for many of their top product lines. Read more