Under The Hood: A Super Software Play

Searching for a way to play a Nasdaq bounce, but can't settle on an individual stock? This week's “Under The Hood” candidate merits consideration for those residing in the indecisive tech camp. We're talking about the iShares S&P North American Technology-Software Index Fund

, which is one of the older sub-sector funds offering exposure to tech stocks. IGV made its debut in July 2001 and boasts over $491 million in assets under management today. In an environment of surging equity correlations, IGV has not been immune to that trend. Year-to-date, the ETF is down just over 10%, the same decline experienced by the S&P 500 and a tad worse than the fall for the Nasdaq Composite. Home to 55 stocks, IGV has an expense ratio of 0.48%.That expense ratio could make IGV vulnerable to competition from the newly minted SPDR S&P Software & Services ETF

, which features an expense ratio of 0.35%. How intense that rivalry becomes remains to be seen. For now, focus on IGV. The iShares offering allocates about 26% of its weight to Microsoft

, Oracle

and Salesforce.com

. Oracle's glum hardware outlook for the rest of this year isn't as problematic to IGV as one might think. The company's software expectations are robust and IGV's other constituents are far more levered to a potential rebound in corporate and consumer software sales, making IGV an ideal tech play on improving economic data. Other top-10 holdings in IGV include Adobe

and Citrix Systems

, highlighting IGV's status as perhaps the most diverse software ETF investors can get involved with. Near-term fundamentals for the software space at large may be challenged due to economic growth concerns and that would obviously pressure IGV. That said, the ETF's chart is appealing here. IGV has broken resistance in the $53 area, now trades around $54 and the chart shows material resistance for another $4 or $5. Bottom line: For those willing to bet on a Nasdaq rally, IGV is one ETF that has to be in the discussion as obvious winner from a Nasdaq bounce.