iShares Global Tech ETF: A Healthy Mix Of Global Exposure

ETFS

Introduction

The iShares Global Tech ETF (IXN) is a market-cap-weighted fund that tracks the S&P Global 1200 Information Technology Sector Index. It has managed to track the index very well over time and has even provided slight outperformance. The ETF charges a fee of 0.46% and invests around 80% in the US and 20% internationally, making it a solid candidate for investors that are seeking more international exposure to global tech names.

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Portfolio Sector Construction

IXN invests in technology companies. The main subsectors include software & services, tech hardware, and semiconductors. All of these subsectors should continue to see solid growth prospects going forward as technology continues to play an ever-increasingly important role across businesses and people’s daily lives.

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Source: Blackrock iShares Global Tech ETF Webpage

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Source: Gartner

In fact, global IT spending is expected to reach over $4 trillion by 2021 with growth pushing 4%. Software, IXN’s largest subsector, is expected to grow double digits in 2020 and 2021 globally.

International Equities

The iShares Global Tech ETF currently holds around 80% of the fund in US equities, with the remaining 20% in international equities. Japan and Korea make the top 3, while Taiwan and the Netherlands fall in the top 5. Finally, Germany and Canada round out the top 7 countries.

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Source: Blackrock iShares Global Tech ETF Webpage

Just two international equities held by the fund make the top 10. These two companies are Samsung Electronics (OTC:OTC:SSNLF) and Taiwan Semiconductor Manufacturing (TSM).

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Source: Blackrock iShares Global Tech ETF Webpage

Going down the holdings though reveal some more notable international holdings with Japanese names like Keyence (OTCPK:KYCCF), Murata (OTCPK:MRAAF), and Tokyo Electron (OTCPK:TOELY). European holdings like ASML Holding (NASDAQ:ASML) and SAP (SAP) are also held by IXN.

Risks

As with any investment, there are always risks involved that one must consider. IXN has not only risks not only for US companies but international ones as well. Some of IXN‘s holdings operate in developing countries that may not have the business practices or legal structure that US investors are used to. This opens up these companies to things like IP theft and risky legal battles. The cultures of these businesses are likely different as well. Investors should be aware of global companies and how they can differ from western companies.

Conclusion

IXN is a broad global technology ETF that brings some international exposure to an investor’s portfolio. Global tech growth should continue to outpace global GDP growth, making it a solid place to look for investment opportunities. IXN may be a good way for investors to diversify out of US-based investments somewhat and own some more international large-cap growth names.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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