This Tech ETF Is Beating QQQ—and Canada May Be Part of the Reason

Key Points

• The iShares North American Tech ETF (IGM) has posted a year-to-date gain of nearly 20%, outpacing the QQQ's roughly 13% return.
• IGM provides investors with targeted exposure to Canadian tech holdings, including Shopify, Celestica, and CGI Group, alongside its predominantly U.S. portfolio.
• The fund holds around $10.35 billion in AUM, carries a 0.41% expense ratio, and earns a consensus Moderate Buy rating based on 914 analyst ratings.

When thinking about America’s neighbors in the Great White North, maple syrup, hockey, and poutine routinely come to mind. However, Canada's robust and highly sophisticated tech sector may deserve more attention.

While American tech stocks still dominate the financial news cycle and the majority of tech-indexed exchange-traded funds (ETFs), Canada’s tech sector accounts for nearly 6% of its total GDP while employing 2.2 million professionals in the country, with notable hubs in Toronto, Montreal, Ottawa, Waterloo, Calgary, and Vancouver.

Due to its data sovereignty laws, merit-based immigration pathways, and a skilled workforce whose labor costs run 30% to 35% lower than those of its United States counterparts, the country is attracting tech companies, from hyperscalers and data center operators to cloud infrastructure companies and quantum research firms.

This often-overlooked facet of Canada is bearing fruit for those aware of it. The Toronto Stock Exchange’s TSX Composite Index is up nearly 8% this year and more than 30% over the past year. Meanwhile, the S&P 500 has gained less than 8% in 2026 and around 22% over the past year. And, as one ETF is proving, funds that include tech companies from north of the border may be on to something.

Canadian Holdings Offer Targeted International Tech Diversification

Given the iShares North American Tech ETF's NYSEARCA: IGM market-cap-weighted orientation, most of the companies in IGM’s portfolio are domiciled in the United States.

However, shareholders gain exposure to Canadian stocks with 1% to 2% of the ETF’s portfolio.

That includes companies like cloud-based e-commerce platform Shopify NASDAQ: SHOP, Toronto-based electronics manufacturer Celestica NYSE: CLS, and Montreal-based IT consulting and services firm CGI Group NYSE: GIB.

Shopify’s struggles this year have been documented, but the stock has rebounded and is up nearly 16% since its YTD low on May 13, which has helped drive the IGM higher. Meanwhile, CLS has gained around 22% in 2026.

Other Canadian holdings include:

• Constellation Software TSE: CSU: Toronto-based mission-critical software solutions provider

• OpenText TSE: OTEX: Waterloo-based cloud and enterprise AI company

• Descartes Systems Group NASDAQ: DSGX: Waterloo-based Cloud-based logistics and supply chain management solutions provider

Because its diversification includes tech and tech-adjacent holdings, the fund can capture cyclical trends across the sector’s industries while insulating shareholders from volatility and downturns that can adversely affect its pure-play positions.

That’s demonstrated by the ETF’s beta of 1.39, underscored by industry allocations of about 39% to semiconductors, around 20% to software, arond 12% to communications equipment, and around 11% to media.

A Tech ETF With a Broader North American Bent

As the IGM has demonstrated, diversifying into tech beyond the United States has proven to be a wise decision.

Despite the most recent tech pullback having impacted companies around the globe, the IGM has still managed to outperform this year. The fund’s year-to-date (YTD) gain of nearly 20% has exceeded that of the Invesco QQQ Trust NASDAQ: QQQ, the largest ETF tracking the NASDAQ-100 with nearly $468 billion of assets under management (AUM). The QQQ, by comparison, has a YTD gain of around 13%.

Formerly the iShares S&P North American Technology Sector Index Fund, the IGM deliberately captures cross-border tech exposure by including Canadian stocks. But it also embraces a broader definition of tech beyond semiconductors, software, and hardware.

In doing so, the IGM includes mega companies operating in the communication services, industrials, and consumer discretionary sectors. Netflix NASDAQ: NFLX, for instance, is the ETF’s 13th largest position with a current weighting of 1.75%.

A Moderate Buy Amid Tech’s Ongoing Pullback

With around $10.35 billion in AUM, the fund carries an expense ratio of 0.41%—which is higher than the average for passively managed ETFs—it pays a dividend that currently yields a modest 0.14%, or 21 cents per share annually.

Institutional selling has outpaced buying over the past two quarters, but those $888 million of outflows pale in comparison to the $2.05 billion of inflows the fund saw in just Q3 FY2025. Over the past 12 months, inflows of $2.6 billion have more than doubled outflows of $1.07 billion.

Another encouraging sign for prospective investors is that short interest for the IGM currently stands at a mere 0.17% of the float, or just over 111,000 shares, compared to 66.75 million shares outstanding.

Based on 914 analyst ratings of companies that account for nearly 75% of its portfolio, the iShares North American Tech ETF receives a consensus Moderate Buy rating.