The iShares Expanded Tech-Software Sector ETF (IGV) continues to draw attention among global investors seeking targeted exposure to software companies driving innovation and cloud adoption. With global software spending projected to exceed $700 billion in 2026, ETFs like IGV provide a structured avenue for both retail and institutional investors to participate in the sector’s growth without selecting individual equities. Performance, sector composition, and market trends make IGV a relevant barometer of software-driven technology growth.

ETF Composition and Market Performance

IGV tracks the S&P North American Expanded Technology Software Index, including large- and mid-cap software developers. As of February 2026, its top holdings include giants such as Microsoft, Salesforce, Adobe, and ServiceNow, which together represent over 50% of the ETF’s weight. The ETF has returned approximately 18% over the past 12 months and over 12% annualized over five years, demonstrating resilience amid sector volatility. Trading volume averages over 500,000 shares daily, indicating robust liquidity, which is critical for institutional execution. The ETF’s performance correlates closely with the broader tech sector but is specifically influenced by software demand trends, subscription revenue growth, and enterprise cloud adoption.

Macro and Sector Dynamics

The software sector remains sensitive to interest rate movements, currency fluctuations, and geopolitical risk. Rising U.S. interest rates in 2025 pressured growth-oriented equities, including software stocks, while the sector showed relative resilience due to recurring revenue models and enterprise adoption. For Israeli investors, exposure to IGV also provides indirect diversification against local tech equities, which are heavily weighted toward semiconductors and cybersecurity. Cloud migration, AI adoption, and increasing SaaS penetration globally are expected to drive revenue growth for underlying holdings, sustaining investor interest in ETFs like IGV as a core tech allocation.

Strategic Implications for Investors

Investors considering IGV gain a diversified approach to software exposure without the concentration risk of individual stock selection. Portfolio managers use it to hedge broader market volatility or complement existing tech holdings. From a strategic perspective, IGV allows participation in structural growth trends—enterprise digitization, SaaS adoption, and cybersecurity software expansion—while maintaining access to highly liquid instruments. It is also a relevant tool for managing sector rotations, as software historically exhibits different performance cycles compared with semiconductors or hardware.

Looking forward, market participants should monitor interest rate policy, enterprise IT spending, and sector-specific valuations. Global macro uncertainty and regulatory considerations in cloud and AI adoption may influence performance, but IGV remains a key vehicle for targeted, diversified exposure to software equities. For sophisticated Israeli and international investors, the ETF’s liquidity, track record, and sector focus provide a benchmark for assessing software market trends and aligning portfolio strategy with long-term technology adoption trajectories.