If you want to invest in some of the world’s fastest-growing companies with a single investment, the iShares US Technology ETF is a fund worth considering. This fund holds 160 of the largest US-based technology companies. So, it’s no surprise to see the fund up 70% in the last 12 months and currently trading at all-time highs.
In this guide, we discuss the fund’s history and its largest holdings. We also show you how to choose a stock broker and how to go about investing in the iShares US Technology ETF.
- 1 How to Invest in iShares US Technology ETF
- 2 Step 1: Choose an ETF Broker
- 3 Step 2: Research iShares US Technology ETF
- 4 What is iShares US Technology ETF?
- 5 iShares US Technology ETF Price
- 6 Is iShares US Technology ETF a Good Investment?
- 7 iShares US Technology ETF Dividend History
- 8 iShares US Technology ETF Top Exposures and Sectors
- 9 iShares US Technology ETF Key Facts
- 10 Step 3: Buy iShares US Technology ETF on Capital.com
- 11 Conclusion
- 12 Capital.com – Best Broker to Invest in iShares US Technology ETF
- 13 FAQs
You can own a stake in most of the world’s best technology growth companies by investing in the iShares US Technology ETF. Investing in this fund takes just a few minutes if you follow these simple steps:
- Step 1: Choose a stock broker – we recommend CFD broker Capital.com due to their large range of ETFs and other instruments.
- Step 2: Open an account by clicking on the ‘Register Now’ button and following the prompts.
- Step 3: Deposit funds into your account. The minimum deposit for Capital.com is just £20.
- Step 4: Find the iShares US Technology ETF by using the search bar. The ETF’s ticker code is IYW.
- Step 5: Enter your order to buy and click the ‘Buy’ button.
That’s it, you now have exposure to 160 of the best technology growth companies in the world.
Step 1: Choose an ETF Broker
In order to invest in ETFs, you will need an account with a stock broker or a CFD broker with a good range of ETFs. We have reviewed all the popular brokers to find those best suited to ETF investing and recommend the following two brokers.
1. Capital.com – Best CFD Broker for ETF Investing
One of the most popular CFD brokers for ETF investing is Capital.com. As a CFD broker, any trade you make will be in the form of a contract for difference, rather than the underlying instrument. CFDs are available on ETFs, shares, indices, commodities, currencies and cryptocurrencies – so all asset classes are covered. In terms of ETFs, Capital.com currently lists 379 different funds.
Investing in ETFs with CFDs offers two advantages – the ability to use leverage and the ability to easily open short positions as well as long positions. These attributes make CFDs ideal for short-term trading as well as long-term investing.
Capital.com doesn’t charge a commission, but instead charges a spread, and is well known for charging very competitive spreads. In addition, you will not be charged for deposits or withdrawals.
If you open an account with Capital.com you will have access to several different trading platforms. The primary platform is a proprietary, feature-rich, web-based platform. It includes a screen for idea generation, charts, a portfolio page, and an insights page.
The broker is also compatible with MetaTrader4 if you want an option with more advanced charting features. Finally, there’s a mobile app and an investor education app.
Capital.com is regulated by the FCA in the UK and CySec in Cyprus, the leading regulatory bodies in both countries.
- Competitive spreads and no commission.
- Low minimum deposit.
- 379 different ETFs available.
- Regulated by the FCA.
- MetaTrader 4 compatible.
- Educational app to help you learn more about investing.
- Only offers CFDs.
71.2% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.
2. Fineco – Best Broker for Direct ETF Investments
Another good broker for ETFs is Fineco Bank. Fineco is part of the Fineco Bank and offers a wide selection of financial services beyond its investing platform. You can use the platform to invest in shares, ETFs, CFDs and mutual funds. UK investors can also use the platform, for ISA investments.
In terms of fees, Fineco doesn’t charge a spread, but instead charges a flat dealing fee of £2.95 for UK stocks and £3.95 for US and European stocks and ETFs. If you invest in mutual funds there is no dealing fee, but there is an annual platform fee of 0.25% of the value of your account.
Fineco has a proprietary trading platform with interactive charts and a stock screener to filter stocks. The platform can also be used on mobile devices. Fineco is regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK.
- Flat dealing fees.
- You can use the platform to invest in an ISA.
- PRA offers an extra layer of regulation.
- Listed on the Italian Stock Market.
- Useful stock screener.
- Offers mutual funds as well as shares and ETFs.
- Thousands of UK and international shares and ETFs.
- Annual fee of 0.25% on mutual funds.
- No support for debit or credit cards.
Your capital is at risk
In this section we will provide you with all the information you need about the iShares core US Technology ETF so that you can make an informed decision before investing.
ETFs, or exchange-traded funds, are funds that hold other assets but are themselves traded on an exchange like shares. Most ETFs are passive funds, which means they simply track an index. However, some ETFs are actively managed by a fund manager.
The iShares US Technology ETF tracks the Dow Jones U.S. Technology Index. This index is weighted by market capitalization and includes technology companies based in the US. The companies included operate in the electronics, software, hardware, communications and media industries. The index includes 161 companies, and the ETF holds all of these stocks.
The fund was launched in May 2000 and is managed by the world’s largest ETF management company, iShares, which is part BlackRock. The fund is rebalanced in September each year, though adjustments are made quarterly to accommodate newly listed companies.
As a technology ETF, it’s no surprise to see that this iShares core US Technology ETF has performed very well over the last few years. The chart below shows the price performance since 2010 when it was trading at $14 a share.
The fund has returned 68% over the last 12 months, 133.84% over three years, and 273% over five years.
The iShares core US Technology ETF holds many of the world’s top technology and media stocks, which are also rapidly growing companies. These companies operate in disruptive industries like e-commerce, social media, cloud computing, mobile technology, and software – industries that are shaping the economy of the future.
There is obviously no guarantee that future returns will be as strong as historical returns have been. However, the funds does hold many of the world’s leading companies, many of which are still growing rapidly while increasing their profit margins. The large companies that make up the bulk of the fund have low debt and solid profit margins, so they are reliable companies.
Technology companies tend to prioritize growth over profitability. The bulk of earnings are therefore reinvested in the business to fund further growth, rather than paid out as dividends. However, some companies in the tech sector do pay dividends.
The iShares US Technology ETF pays a modest dividend, though it is relatively good for the sector. The current yield is about 0.78% and dividends are paid quarterly. The last four distributions were 11 cents, 10.4 cents, 7.8 cents, and 9.35 cents, respectively, and totaling 38 cents for the year..
The fund’s holdings are weighted by market capitalization. To calculate the weight of each stock, the market value of all the stocks that meet the index requirements are added up. The value of each company is then divided by the total to arrive at the percentage that is allocated to that stock. Weightings are also adjusted so that only the free float for each share is included. This excludes restricted shares that are not available for trading.
The largest 10 holdings, which could all be classified as large cap growth stocks account for 62% of the fund. Over the last two months, large-cap tech stocks have been outperforming the market which has led to strong performance for the fund.
Apple Inc is the largest holding, accounting for 18.6% of the fund. That isn’t surprising since it is also the most valuable company in the world. Apple has come a long way from its roots as a manufacturer of desktop computers. Products like the iPhone, iPod, iTunes, and iPad have all revolutionised their respective industries.
The iPhone remains Apple’s biggest revenue generator, but it is slowing transitioning from its reliance on hardware sales. Going forward a growing percentage of revenue will come from services like music, apps, games and TV shows. Apple’s shares is up 85% in the last year, and 993% over the last 10 years.
Microsoft Corporation is the second-largest holding at 17.3% of the fund. Microsoft has reinvented itself over the last decade and is now a very well-diversified company. It’s no longer dependent on Windows and the Office suite and is now a major player in cloud computing and gaming.
The company benefited during the COVID-19 pandemic as companies accelerated their migration to cloud computing. The Teams product has also become an essential tool for companies with remote workers. Microsoft’s shares have responded well to the innovation of the past few years. The stock price has risen 49% over the last year and 980% in the last decade.
Google’s parent company, Alphabet, accounts for just under 10% of the ETF. The shares are actually divided into two classes, one with voting rights and one without. From an investor’s point of view, there is no difference when buying Alphabet shares.
Alphabet still earns most of its revenue from Google Search, but there are several other very valuable companies in the group. The most valuable business apart from Search is YouTube. Which is now the third most visited social media site. Google Cloud is the third-largest company in the rapidly growing cloud computing industry. In the future, we are likely to hear more about Waymo, Google’s autonomous vehicle operating system.
Google’s ad business suffered during the pandemic in 2020 but has bounced back quickly in the first quarter of 2021. The stock has been the best performing large-cap tech stock in 2021, with a 33% return.
Facebook is the fourth-largest holding at 4.6% of the fund. Facebook earns revenue from advertising on its Facebook, Instagram, and WhatsApp platforms. Facebook’s three platforms are some of the most used websites on the internet. In 2020, Facebook’s user base reached 2.8 billion, as people spent even more time online. The stock price has risen 67% over the last year and 600% since listing in 2012.
Nvidia supplies components to several of the fastest-growing industries including artificial intelligence, cloud computing, automation, and blockchain technology. The company is now the world’s biggest hardware company in the tech sector. The stock accounts for 3.6% of the fund, making it the fifth-largest holding. The share price recently hit a new all-time high after the company gave an upbeat revenue update.
Other companies that account for more than two percent each are Adobe, Intel, Cisco, and Salesforce.
As far as sector exposure goes, the fund is obviously limited to technology companies. However, it’s worth noting that some companies that are usually classified in the communications sector are also included.
Some market classification methods result in companies in other sectors being excluded even though they have a strong focus on technology. An example is Amazon which is classified as a retail company despite its position as a leader in technology. This means that if you would need to buy Amazon shares separately to gain exposure to the company.
Besides the points already discussed, below are some of the key facts to know about the fund.
|Date of Inception||19-May-00|
|Fund Size||$7.3 billion|
|12-Month Range||56.21 – 95.26|
In this section, we will take you through the process of opening an account with our recommended platform, Capital.com, and making an investment in the iShares US Technology ETF.
Step 1: Open an Account with Capital.com
To open a new account, head to the Capital.com website and click on the ‘Register Now’ button. Then simply enter your email address and a password of your choice to start the process. You can alos sign up using your Facebook, Google, or Apple account. You’ll receive an email to verify your email address before you continue.
Step 2: Verify your ID and Address
You will then need to supply your address, telephone number, date of birth and a national identification number. At this point, you will be able to go straight to the trading platform. However, to properly verify your account you will need to upload an ID document. This can be a passport, driver’s license, or ID card.
Step 3: Deposit Funds
Before you can begin trading, you’ll need to fund your account. Capital.com’s minimum deposit amount is £20. The payment options vary from country to country, but at a minimum you will have the choice between a debit/credit card or a bank transfer. We recommend a credit or debit card deposit because it’s the fastest.
Step 4: Find the iShares US Technology ETF
The easiest way to find the security you want to invest in is by using the search bar which you’ll find at the top of the platform’s homepage. You can either search for iShares US Technology ETF or by using the ticker code IYW. You can also create a watchlist and add your favorite securities to it.
Step 5: Invest in iShares US Technology ETF
To invest in the ETF, click ‘Buy’ next to the buy price, and an order entry window will appear on the right of the screen. If you click on ‘Market Info’ at the top of the screen, you will be shown more information about the instrument like the required margin percentage and the overnight fee.
When you select the number of shares you want to buy, the required margin will be shown. You can also set a limit price, a stop loss level, and a take profit level. The last step is to click on the ‘Buy’ or ‘Place Limit Order’ button. You can then check the portfolio page to track your positions.
You should now have a good idea of what the iShares US Technology ETF is all about and why it has performed well over the last decade. This fund holds some of the most profitable companies in the world, and many of them are still growing revenue and profits rapidly.
If you want to invest in this ETF, we recommend Capital.com. This FCA-regulated broker offers CFDs on this fund, as well as 378 other ETFs. With CFDs, you can also use leverage, and short sell securities if you think their price will decline.In addition, you can trade CFDs on shares, currencies, commodities, indices, and cryptocurrencies.
71.2% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.
What is the best tech ETF?
There are quite a few technology ETFs on the market. Popular alternatives to the iShares US Technology ETF are those managed by State Street, Invesco, and Vanguard. These funds are all weighted by market capitalization, so the performance has been similar. However, the iShares fund has been the best performer over the last few years.
Is there a management fee for the iShares core US Technology ETF?
Yes, the fund has an annual expense ratio of 0.43% which includes the annual management fee and other costs of running a fund. In practice, these fees are deducted from the fund’s NAV on a pro-rate basis each day. So the NAV is reduced by just 0.00172% each day.
What is the minimum investment for the iShares core US Technology ETF?
If you invest with Capital.com, the minimum you can deposit is £20. However, the minimum investment for each ETF is one share, and prices vary from one ETF to the next. With this ETF trading at $95, the minimum investment is $95.
Does the iShares US Technology ETF pay dividends?
Yes, the fund distributes dividends quarterly. Technology stocks don’t all pay dividends, so the yield is quite modest. The current annual dividend yield is about 0.44%, though it has been closer to 0.7% in the last year.
Is the iShares core US Technology ETF a high-risk ETF?
Smaller growth and technology stocks are quite risky. However, 62% of this fund is invested in the 10 largest US tech companies. These are all stable companies with strong profit margins and low debt.
How are stocks chosen for this ETF?
The fund replicates the Dow Jones US Technology index. This index includes companies that are based and listed in the US, belong to technology-related industries, and meet certain liquidity requirements. Stocks that meet the requirements are then weighted by the market value of outstanding, unrestricted shares.