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Today's Bonus Content
3 ETFs to Play the Enterprise Software SlumpReported by Nathan Reiff. Article Published: 5/4/2026. 
Key Points
- Major players in the enterprise software space like IBM and ServiceNow have experienced stock price declines this year amid concerns about AI and other issues.
- ETFs focused on the space, including IGV, WCLD, and, more broadly, ARKK, could be found at a relative discount while these companies are struggling.
- Still, software firms will need to adapt in order to reverse these trends, and the threat of AI looms large.
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Enterprise software—large-scale tools designed for organizations and business clients—is experiencing a slump as providers and customers navigate the shifting AI landscape, the inertia built into legacy systems, and uncertainty about the future of software-as-a-service (SaaS) companies. That weakness shows up in the share-price declines of major providers like ServiceNow (NYSE: NOW) and IBM Corp. (NYSE: IBM), which are down roughly 40% and 20% year-to-date (YTD), respectively. One way for investors to approach this trend is to buy while prices are relatively low. If the enterprise software industry adapts successfully—either by integrating AI into existing products or by pivoting to business models that reduce AI-related risk—many companies could rebound. The exchange-traded funds (ETFs) below offer simple ways for investors who are optimistic about the sector to gain diversified exposure. IGV's Approach Combines Legacy Software Leaders With Smaller Growth Plays
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The iShares Expanded Tech-Software Sector ETF (BATS: IGV) tracks a benchmark index of U.S. software companies across market caps. Across more than 110 holdings, IGV provides exposure to large software names such as Oracle Corp. (NYSE: ORCL)—which tend to carry significant weight—alongside many smaller firms. Those smaller names may be especially attractive while some of the biggest players are under pressure. A bet on a fund like IGV assumes the ETF will ultimately favor the software firms that best navigate the shift toward AI. By balancing large, established companies with up-and-coming players, IGV offers exposure to multiple strategies for addressing that transition. Investors should also weigh valuation and cost. With a price-to-earnings (P/E) ratio of 36.4, IGV is not cheap despite having fallen about 18% YTD, and it carries an expense ratio of 0.39%. Some investors may prefer to wait for clearer signs of a bottom before buying. WCLD's Cloud-Software Strategy Avoids Overweighting the Biggest NamesFor a different take, the WisdomTree Cloud Computing Fund (NASDAQ: WCLD) follows an index of U.S.-listed companies providing cloud-based software and services. Its 65 holdings are weighted more evenly than IGV's—one of the largest holdings, DigitalOcean Holdings Inc. (NYSE: DOCN), represents only about 2.1% of the portfolio. That more even weighting means prominent names do not dominate WCLD's basket, which can help limit downside if a few big players decline sharply. The trade-off is potentially lower upside if only a handful of companies lead a sectorwide rally. WCLD's expense ratio is slightly higher than IGV's at 0.45%, and the fund has a smaller asset base and lower average trading volumes. Still, liquidity is adequate for most investors: WCLD manages roughly $224 million in assets and has a one-month average trading volume of about 1.1 million. ARKK Could Be a Bargain While Down Slightly Year-to-DateThe ARK Innovation ETF (BATS: ARKK) charges the highest fee among these funds, with a 0.75% expense ratio. However, it has delivered the best performance of the three in recent months—still negative YTD, but down by less than 1%. Actively managed by Cathie Wood's team, ARKK targets companies that could benefit from transformative technologies, including AI. It is not limited to software: the fund holds a broader set of tech and innovation-focused businesses, primarily in North America but with the flexibility to invest globally. With the smallest roster—fewer than 50 positions—ARKK is more concentrated, and its largest holdings can represent close to 10% of assets. The fund has a track record of strong long-term performance and has occasionally outpaced the market and other thematic ETFs. While it's down so far in 2026, some investors may view the pullback as a buying opportunity. |
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