Unlocking the Power of Technology: A Winning ETF Strategy
BlackRock, the world’s largest investment company, manages an impressive $11.5 trillion in assets, with $3.5 trillion of that invested in exchange-traded funds (ETFs) through its iShares subsidiary. Among its diverse range of ETFs, the iShares Expanded Tech Sector ETF (NYSEMKT: IGM) stands out for its exceptional performance, consistently outpacing the S&P 500 since its inception in 2001.
A Broad Portfolio of Tech Giants
The iShares Expanded Tech Sector ETF invests in a diverse range of 290 technology stocks, spanning hardware, software, internet, and media segments. Its top 10 positions, accounting for 55.2% of its total value, feature some of the biggest names in the AI space, including Nvidia, Meta Platforms, Apple, Microsoft, and Alphabet.
Leaders in AI Driving Growth
These tech giants have been instrumental in creating significant value over the last couple of years, driven by their leadership in AI. In 2024, these stocks generated an average return of 65.5%, far surpassing the 23% gain in the S&P 500. Nvidia, in particular, is poised to continue its strong performance in 2025, driven by the demand for its new Blackwell graphics processing units (GPUs) for data centers.
Meta and Microsoft: Strong Growth Ahead
Meta Platforms is expected to release its Llama 4 large language model (LLM), which could be the most advanced in the industry, and investors can expect new AI features for its Facebook, Instagram, and WhatsApp platforms. Microsoft and Alphabet will further improve their own AI models, while experiencing strong growth in their cloud computing segments.
A Compelling Track Record
The iShares Expanded Tech Sector ETF has delivered a compound annual return of 11% since its inception in 2001, outpacing the average annual gain of 8.5% in the S&P 500 over the same period. Over the last 10 years, its compound annual return has accelerated to 20.2%, crushing the 13.7% annualized gains of the S&P 500.
The AI Boom: A Long-Term Opportunity
While it’s unrealistic to expect any fund to grow by 20% per year in perpetuity, the AI boom is still in its early stages. With tech giants expected to spend $1 trillion upgrading their data centers over the next four years, and AI projected to add $15.7 trillion to the global economy by 2030, the companies in the ETF are well-positioned to benefit from this trend.
A Diversified Portfolio Approach
While the iShares Expanded Tech Sector ETF has a strong track record, it’s essential for investors to own it as part of a diversified portfolio, acknowledging the risk that AI may not live up to expectations.
Expert Insights for Investors
Before investing in the iShares Trust – iShares Expanded Tech Sector ETF, consider the expert insights from The Motley Fool’s Stock Advisor analyst team, who have identified what they believe are the 10 best stocks for investors to buy now. Their guidance can help you build a successful portfolio and achieve long-term growth.
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