Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
IShares U.S. Technology ETF IYW offers investors broad exposure to the U.S. technology sector. As a sector-specific exchange-traded fund, IYW should be viewed as a tactical investment, suitable only for the satellite portion   Read more 

Bull Case

About 85.5% of IYW's investments are in companies that have wide or narrow Morningstar Economic Moat Ratings--firms that Morningstar's equity analysts believe have durable competitive advantages.
The top holdings in this fund have strong balance sheets, which should support continued investment in research-and-development and growth strategies.
IT spending has been generally resilient and is forecast to grow 3.2% worldwide in 2015, according to the Gartner Group. Read more 

Bear Case

The top 10 holdings account for 65.5% of this fund's portfolio, so this fund's performance and risk attributes are closely tied to just a handful of stocks.
A pullback in IT spending could weigh on the performance of this ETF. Some of this ETF's companies will be negatively affected by what many are calling a secular decline in PC demand.
This ETF's expense ratio is much higher than that of competing technology ETFs. Read more 

Online Giants in a Single Fund 
Watch more 

Premium Membership

View all of our analyst reports with a free trial to Morningstar.com Premium.