Few Surprises With This Tech ETF

Sometimes, few if any surprises with investments are a good thing. Likewise, predictability is not a negative. Such is life for the iShares U.S. Technology ETF IYW. With a gain of about 1 percent Wednesday, IYW hit a record high and is up 24 percent year-to-date.

IYW is a large-cap technology exchange-traded fund that competes with more heralded fare, such as the Technology Select Sector SPDR XLK and the Vanguard Information Technology ETF VGT. For its part, IYW is neither new nor small. The ETF recently celebrated its 17th birthday and has over $3.6 billion in assets under management.

Home to 136 stocks, IYW tracks the Dow Jones U.S. Technology Index. That is a cap-weighted benchmark of major U.S. technology companies.

How About Some Apple?

When considering the ascent of Apple Inc. AAPL this year, understanding the corresponding rise in IYW is easy. Shares of the iPhone maker are up nearly 41 percent year to date, helping IYW. The ETF has an 18.5 percent weight to Apple, one of the largest weights to Apple among all ETFs, technology funds or otherwise.

While Amazon.com, Inc. AMZN and Netflix, Inc. NFLX are classified as consumer discretionary stocks, meaning they do not reside in a technology ETF like IYW, the fund still features ample exposure to acronyms such as FAANG and FAAMG.

Microsoft Corporation MSFT is IYW's second-largest holding at a weight of 12.3 percent while Facebook Inc FB and Google parent Alphabet Inc. GOOG GOOGL combine for another 21 percent of the fund's weight. IYW has a combined weight of 31 percent to Apple and Microsoft compared to 21 percent in the Nasdaq 100 Index.

These Industries Make IYW Tick

Essentially all of IYW's holdings hail from the hardware, software and semiconductor industries. While some investors have recently departed semiconductor ETFs, it cannot be argued that including IYW, nearly 10 technology ETFs hit all-time highs on Wednesday. 

In the current quarter, IYW has lost nearly $20 million in assets, but the ETF has added nearly $19 million on a year-to-date basis.

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