An ETF, or exchange traded fund, is both flexible and diverse, allowing investors exposure to the industry in which they have chosen to invest. Launched in 2001, the iShares North American Tech-Software ETF (NYSEARCA:IGV) has 56 holdings, giving investors a good spread of the technology market.
The iShares North American Tech-Software ETF is sponsored by securities and asset management company BlackRock (NYSE:BLK). In January 31, 2017, Reuters reported that for the first time, BlackRock’s ETF business topped $1 trillion in assets in the US. The company attributed the success of their ETF business to, “the use of iShares ETFs to replace individual securities, to execute more efficiently than swaps, futures or individual bonds, to take long-term core positions and to construct efficient portfolios,” according to Martin Small, the US head of iShares.
Year-to-date, the iShares North American Tech-Software ETF has gained 12.76 percent, and over the last five years, gains are already at 99 percent. The fund primarily gives investors exposure to a wide range of North American software companies: US companies dominate the fund at 98.24 percent and Canadian companies take up 1.70 percent. Application software is the biggest sector represented, followed by systems software.
The top five holdings are Adobe (NASDAQ:ADBE), Salesforce (NYSE:CRM), Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL) and Activision Blizzard (NASDAQ:ATVI). The latter features regularly in INN’s weekly NASDAQ roundups, along with many others in the ETF. Here, we profile five companies that trade on the NYSE, found on the fund’s lower end, in order to give investors a different view.
Paycom Software (NYSE:PAYC)
American company Paycom launched in 1998 and specialize in the cloud. They aim to transform HR, providing employers easy access to their payroll data, that is contained in a single database. They have had an incredibly strong start to the year; since February of 2016 they have seen gains of 115.45 percent.
Zendesk develop software. They are focused on ensuring harmonious relationships between company and customer. Their own customers include well-known firms such as Slack and Uber. Their family of products includes live chat software, social messaging apps and shared team inboxes. Year-to-date they have enjoyed gains of 28.68 percent and their overall trajectory has been positive.
HubSpot provide a cloud-based marketing and sales software platform. Using this, clients can enjoy blogging, SEO and social media in one place. Today, more than 21,500 customers in over 90 countries use their services. They went public in 2014 and are among the world’s fastest-growing companies. HubSpot is up 27.02 percent year-to-date.
Gigamon allow customers to see and monitor traffic across their networks. Their Visibility Fabric solution enables control of network activity, filtering it so that management can analyze it more effectively. They are also involved in cybersecurity, helping protect companies who are migrating to the cloud. Over the past year, their shares have gained 55.28 percent.
Another company operating in the cybersecurity space, Barracuda Networks offer cloud-enabled solutions so that customers can store their data securely. They combat the rise of ransomware with anti-phishing detection, threat scanners and vulnerability managers. Companies in more than 100 countries utilize the service. Barracuda are at the bottom of the list but year-t0-date, they are up 10.03 percent.
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Securities Disclosure: I, Emma Harwood, hold no direct investment interest in any company mentioned in this article.