Yesterday we focused some attention on a U.S. Equity sector that has seen some rotation out lately, that being Semiconductors, which provides an opportunity to delve into a related Tech sector, Networking. IGN (iShares S&P GSTI Networking Index, Expense Ratio 0.47%) has seen some healthy inflows year to date, pulling in more than $85 million making this a $327 million fund.
The fund has heavier weightings to equity names that likely strike a chord with those whom remember the late 1990s technology boom, such as top holding CSCO (8.55%), fourth largest weighting QCOM (8.47%), fifth largest weighting JNPR (8.45%), as well as number eight ranked BRCD (4.53%) to name a few, and other names of interest among the top ten holdings include MSI, FFIV, PANW, ARRS, RVBD, and HRS.
The ETF has had some trouble pushing through the $35 mark recently, which would represent 2014 highs, and undoubtedly has run into the same speed-bumps that have rippled through various Semiconductor ETFs following disappointing earnings releases from key components such as QCOM and JNPR for example (although the latter has recovered somewhat in recent sessions).
IGN remains substantially larger than the second ETF in the Networking category, PXQ (PowerShares Dynamic Networking Portfolio, Expense Ratio 0.60%) which has about $27 million in assets under management since its debut back in 2005.
PXQ’s top holdings look a bit different than those of IGN thanks to a different index methodology. IGN of course uses a market cap weighted approach while PXQ follows the proprietary “Intellidex” approach that may be familiar to some that follow other PowerShares sector ETFs.
According to fund literature, “The Intellidex Index thoroughly evaluates companies based on a variety of investment merit criteria, including: price momentum, earnings momentum, quality, management action, and value”, leaving the portfolio with thirty stocks in the sector.