Based on data from global research and advisory firm Gartner, worldwide IT spending is expected to reach $4 trillion by the end of this year. This gives ETF investors an opportunity to bet on software growth with the Invesco Dynamic Software ETF (PSJ).
PSJ seeks to track the investment results of the Dynamic Software IntellidexSM Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index.
As expected, the underlying index is composed of domestic software companies. These companies are principally engaged in the research, design, production, or distribution of products or processes that relate to software applications and systems and information-based services.
Per a fund description on ETF Database, ” PSJ, an Invesco PowerShares product, invests in only U.S. companies, so this may not be the right fund for those who wish to gain exposure on a global scale. At first glance, investors may assume that the ETF would invest in mega cap software firms, when in actuality, the fund invests primarily in medium cap companies, giving investors access to a fair amount of lesser-known, potentially high growth firms.”
As the description notes, the secret sauce to PSJ’s performance doesn’t rely on big tech exposure to giants like Amazon, Apple, and Microsoft. While the fund does have exposure to Microsoft, it’s only a 4% allocation of the fund’s assets.
PSJ is never too top-heavy on any one stock. Its largest is Crowdstrike Holdings at about 6%. Next is a 5.6% allocation to Shopify. Snap rounds out the top 3 at a 5% allocation.
“Software Is Eating The World”
It’s one thing to have the latest and greatest hardware, but without the software to power it, the device usage isn’t optimal. That said, growth in the software industry is expected to continue its upward trajectory.
“Companies worldwide are embracing automation, Cloud computing, data analytics, websites, social media and AI to enhance their business and capture their customers online,” a Yahoo! Finance article said.
“Data from U.S. Department of Labor shows that software is one of the fastest-growing industries when it comes to job creation,” the article added. “Jobs in computer and information technology as a whole are expected to grow 11% from 2019 through 2029, much faster than the average for all occupations. Specifically in the software space, jobs are expected to grow by 22% through 2029, must faster than the average. To quote Marc Andreessen, software is eating the world.”
For more news and information, visit the Innovative ETFs Channel.
