A sound investment process and strong management team underpin iShares US Tech Breakthrough Mltsctr ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's sensible investment philosophy merits a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in quality exposure and momentum exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

NVIDIA

Alphabet

Amazon

Merck

Microsoft

salesforce.com

Netflix

Apple

Oracle

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. iShares US Tech Breakthrough Mltsctr ETF earns a High Process Pillar rating. The most notable contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's five-year risk-adjusted success ratio of 55% also influences the rating. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. The firm's five-year retention rate of 92% reinforces the process as well.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the investment results of the NYSE® FactSet® U.S. Tech Breakthrough IndexTM.  The underlying index measures the performance of U.S. listed companies engaged in cutting edge research and development of products and services in the areas of robotics and artificial intelligence, cyber security, cloud and data tech, financial technology, and and genomics and immunology. It generally will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. 

 The portfolio is overweight in healthcare and financial services relative to the category average by 10.6 and 4.0 percentage points, respectively. The sectors with low exposure compared to category peers are technology and industrials, with technology underweighting the average portfolio by 20.3 percentage points of assets and industrials similar to the average. The strategy owns 177 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 42.6% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 52.4%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 21% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

iShares’s team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are three managers listed on the fund: Greg Savage, Jennifer Hsui, Paul Whitehead. Experience on the team is abundant, with 18 years of average portfolio management experience. Together, they manage a total of 258 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares U.S. Tech Breakthrough Multisector ETF

TECB tracks an index of US equities that could benefit from breakthrough technologies, modified market cap weighted.

iShares U.S. Tech Breakthrough Multisector ETF owns a diversified portfolio of U.S. large-cap stocks benefiting from breakthrough technologies. The Fund has generally outperformed the S&P 500 in bull markets but underperformed in bear markets since its inception in 2020. TECB's portfolio includes not only information technology stocks but also companies from other sectors, potentially impacting long-term returns compared to traditional technology ETFs.

TECB: Not A Good Choice When Compared To Other Traditional Technology ETFs

First Trust Dow Jones Internet Index Fund

MicroSectors FANG+ ETN

iShares Evolved U.S. Technology ETF

iShares North American Tech ETF

Roundhill Ball Metaverse ETF

Invesco NASDAQ Internet ETF

First Trust Expanded Technology ETF

Strong corporate earnings has resulted in strong gains for tech ETFs, with many hitting a new one-year high.

Tech ETFs Riding the Wave of Strong Earnings

iShares U.S. Tech Breakthrough Multisector ETF warrants a hold rating due to mixed factors impacting the fund's performance looking forward. TECB has a more evenly diversified approach compared to other technology ETFs, including weight in non-IT sectors, but has seen lower historical performance compared to XLK, VGT, and QQQ. The Fund has a higher expense ratio, lower dividend yield, and negative dividend growth compared to other big tech ETFs examined in this article.

TECB: More Evenly Diversified At The Cost Of Lower Performance

TECB invests in stocks benefiting from major tech innovations including AI, robotics, cybersecurity, genomics, and fintech. The fund has impressively outperformed the Nasdaq-100 over the past year. We highlight several advantages of the strategy and underlying portfolio methodology relative to alternative tech ETFs.

TECB: Well-Positioned For Positive Returns

iShares U.S. Tech Breakthrough Multisector ETF is a portfolio of major tech players, and it's not a coincidence that many have a dog in the AI race. To some extent, corporates paying the AI-option premium will not exercise them which will kill the hype. On the other hand, AI will create huge value among a couple of the winning players which could drive a portfolio of them like TECB. Valuation is a worry though.

News for iShares U.S. Tech Breakthrough Multisector ETF ETF (TECB)