Should You Invest in the Invesco AI and Next Gen Software ETF (IGPT)?

Launched on 06/23/2005, the Invesco AI and Next Gen Software ETF (IGPT) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Software segment of the equity market.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Software is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $359.86 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Software segment of the equity market. IGPT seeks to match the performance of the STOXX WORLD AC NEXGEN SOFTWARE DEV ID before fees and expenses.

The STOXX World AC NexGen Software Development Index is comprised of companies with significant exposure to technologies or products that contribute to future software development through direct revenue.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector--about 60.10% of the portfolio. Telecom and Healthcare round out the top three.

Looking at individual holdings, Meta Platforms Inc (META) accounts for about 9.13% of total assets, followed by Alphabet Inc (GOOGL) and Nvidia Corp (NVDA).

The top 10 holdings account for about 58.49% of total assets under management.

Performance and Risk

Year-to-date, the Invesco AI and Next Gen Software ETF has lost about -15.17% so far, and is down about -14.58% over the last 12 months (as of 04/14/2025). IGPT has traded between $35.18 and $49.76 in this past 52-week period.

The ETF has a beta of 1.10 and standard deviation of 26.95% for the trailing three-year period. With about 99 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco AI and Next Gen Software ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IGPT is an excellent option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

SPDR S&P Software & Services ETF (XSW) tracks S&P Software & Services Select Industry Index and the iShares Expanded Tech-Software Sector ETF (IGV) tracks S&P North American Technology-Software Index. SPDR S&P Software & Services ETF has $425.73 million in assets, iShares Expanded Tech-Software Sector ETF has $9.69 billion. XSW has an expense ratio of 0.35% and IGV charges 0.41%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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This article originally published on Zacks Investment Research (zacks.com).

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