8. iShares Expanded Tech Sector ETF (NYSE: IGM)
iShares Expanded Tech Sector ETF (NYSE: IGM) is an exchange traded fund thattracks the investment results of companies based in North America that areworking in the technology, communications, and consumer discretionary sectors.It is a non-diversified fund that invests 90% of assets in equities on theunderlying index. IGM ranks 8th in the list of best tech ETFs to buy accordingto Reddit.iShares Expanded Tech Sector ETF (NYSE: IGM) has more than $3.3 billion in netassets under management. The year-to-date daily total return of the fund is8.21%. The net expense ratio is 0.46% and the 52-week price range of the fundlies between $261 and $392.The fund has more than 8.5% of total assets invested in Microsoft Corporation(NASDAQ: MSFT), the Washington-based technology company. At the end of thefirst quarter of 2021, 251 hedge funds in the database of Insider Monkey heldstakes worth $58.9 billion in Microsoft Corporation (NASDAQ: MSFT), down from258 the preceding quarter worth $52.8 billion.In its Q1 2021 investor letter, Polen Capital, an investment management firm,highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one ofthem. Here is what the fund said:> “We have written extensively about Microsoft in recent commentaries. It was> our leading contributor last year and one of our largest weightings within> the Portfolio. It continues to experience business momentum through several> dominant, essential, and competitively advantaged businesses, like Office> 365 and Azure. The markets it competes for are enormous, which gives the> company the ability to compound at scale. In the past quarter alone, the> company generated over $40 billion in revenue, representing a 17% growth> rate. The inherent operating leverage in Microsoft’s business model> continues and led to 34% earnings growth this past quarter. Despite the> broad rotation we saw in the first quarter and Microsoft’s robust> performance in 2020, we think its business fundamentals continue to exhibit> strength, and the stock continues to reflect the fundamentals.”
What is BlackRock iShares XIT ETF?
BlackRock iShares XIT ETF is a low-cost index fund offered by BlackRock sinceMarch 19, 2001. It is one of the older funds offered by BlackRock thatprovides investors with exposure to a basket of Canadian InformationTechnology stocks.The ETF seeks to provide investors with long-term capital growth byreplicating the performance of the S&P/TSX Capped Information Technology Indexas closely as possible, net of expenses.The underlying ETF focuses primarily on various Canadian companies in theInformation Technology sector. The ETF is actively managed by BlackRock AssetManagement, providing investors with the peace of mind that a reputableinstitution is managing the portfolio of stocks.
What does iShares XIT Invest in?
Most ETFs diversify across various sectors, geographical locations, andbetween fixed-income and equity securities to align with respective investinggoals. However, the BlackRock iShares S&P/TSX Capped Information TechnologyIndex focuses primarily on the Information Technology sector.The underlying index comprises Canadian equity securities that trade on theToronto Stock Exchange.All things considered, you can consider iShares XIT a bet on the Canadian ITsector across its various segments, including Application Software, InternetServices, and Infrastructure, IT Consulting, Systems Software, CommunicationsEquipment, and more. Some of its holdings are in cash and its derivatives.The total value of the ETF is $476.52 million as of November 30, 2020,highlighting a remarkable growth for investor capital in the last few years.
iShares XIT Asset Allocation
Asset allocation of XIT: 100% Equity, 0% Fixed IncomeIn this section of my iShares XIT review, I will discuss the fund’s assetallocation. Typically, ETFs provide investors with exposure to a mix of bothfixed-income and equity securities. However, iShares XIT consists primarily ofsecurities in the underlying S&P/TSX Capped Information Technology Index. Theindex focuses mainly on equity securities, with no fixed-income assets.
iShares XIT Top Holdings
The BlackRock iShares S&P/TSX Capped Information Technology Index ETFprimarily invests in various segments of the Canadian tech sector. Its top tenholdings comprise 98.03% of its entire investment portfolio. The remaining0.07% of the fund’s holdings are in cash and/or derivatives.While iShares XIT keeps adjusting its holdings to reflect the S&P/TSX CappedInformation Technology Index, it has had an acute focus on Canadian equitieslike Shopify, Constellation Software, and CGI Inc.Shopify used to account for a more significant allocation of the ETF’s fundsunder management, but it has recently been rebalanced by management todiversify holdings within the top ten equity securities.
iShares XIT Sector Weighting
Typically, this is the section in my reviews where I discuss the sectorweighting of an ETF, depending on how much it invests in across Financials,Industrials, and other sectors of the economy. I will provide a segmentweighting in my iShares XIT review because the ETF invests in differentsectors within the Canadian tech sector.iShares XIT invests almost half of its entire funds in application software.The second-biggest allocation is towards the Internet Services andInfrastructure segment. It invests in IT Consulting and Other similar servicesand then focuses on the Systems Software segment.It has less than 1% weighting towards each of the Communications Equipment,Electronics Manufacturing Services, and Electronic Equipment and Instruments.The remaining allocation is towards Cash and/or Derivatives.
How to Buy iShares XIT ETFs in Canada
My two favourite ways to buy these ETFs in Canada are the following:To learn more, check out my review on the best trading platforms in Canadahere.
In a hurry? Here’s the list:
1. VGT – Vanguard Information Technology ETF 2. XLK – Technology Select Sector SPDR Fund 3. QQQ – Invesco QQQ Trust 4. FDN – First Trust Dow Jones Internet Index Fund 5. ARKK – ARK Innovation ETF
VGT – Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT) is one of the most popular techETFs on the market, with over $38 billion in assets. The fund seeks to trackthe MSCI US Investable Market Information Technology 25/50 Index, providingbroad exposure to the tech sector in the United States. This ETF has over 320holdings and an expense ratio of 0.10%.
XLK – Technology Select Sector SPDR Fund
The Technology Select Sector SPDR Fund (XLK) is another popular broad techETF. The fund was established in 1998 and seeks to track the Technology SelectSector Index. This ETF has 72 holdings. Whereas VGT above provides about 10%mid-cap growth exposure, XLK is exclusively large-caps. XLK has an expenseratio of 0.13%.
1. BlackRock iShares S&P/TSX Capped Information Technology Index ETF
Ticker: TSE:XIT % of Assets in Technology: 100% as of January 29, 2021 Assets Under Management: $543.9 million as of January 29, 2021BlackRock iShares XIT is the best tech ETF in Canada if you want to capitalizeon the growth of Canadian tech sector companies. The ETF invests entirely inequity securities and can be considered a good reflection of the sector’sgrowth in Canada.The ETF’s performance has been prolific over the past few years. Withcompanies like Shopify Inc., Constellation Software Inc., and CGI as three ofits top holdings, the ETF provides investors with exposure to some of the top-performing Canadian tech stocks right now. This is the best tech ETF in Canadaif you seek to invest in a group of Canadian tech companies without anyexposure to other asset classes.This is a pure-play tech ETF that carries significant risk but very highrewards when the tech sector is performing well. You can read my fullBlackRock XIT review here to find out more about the ETF.
5. BlackRock iShares NASDAQ 100 Hedged to CAD Index ETF
Ticker: TSE:XQQ.TO % of Assets in Technology: 48.30% as of February 2, 2021 Assets Under Management: $1.4 billion as of February 2, 2021BlackRock iShares XQQ is another ETF offered by BlackRock Asset Managementthat tracks the performance of the iShares NASDAQ 100 Index Fund hedged to theCanadian dollar. It provides investors with exposure to a diverse portfolio ofUS equity securities. It is one of the best tech ETFs in Canada because itallocates 48.3% of its funds to the tech sector. That also means it is not apure tech ETF.The ETF focuses on non-financial US stocks and is similar to BMO ZQQ in termsof its asset allocation and investment objectives. Some of the ETF’s topholdings include Apple Inc., Microsoft Corp., Amazon.com Inc., and Tesla Inc.It can be an excellent asset for you to consider if you want to gaindiversified exposure to the US tech sector.