The iShares Expanded Tech-Software Sector ETF (IGV) recorded a 16% drop in January 2026, marking its worst opening month performance on record. Outflows accelerated as investors offloaded an estimated $800 million from the fund during the four-week downturn. The sell-off coincided with mounting concerns over AI integration costs and valuation pressures, driving the ETF’s net assets down to $17.2 billion by month’s end.

January’s decline in IGV represents the steepest monthly fall since October 2008, when software stocks were swept lower by the global financial crisis. Over the past decade, the ETF has delivered average annual returns of 12.4%, but this pullback erased roughly 14 months of gains. Historical data show that similar drawdowns—such as the 20% drop in 2018—have often presented entry points for long-term investors, with subsequent rebounds averaging 30% within 12 months.

Despite the recent volatility, there is no indication of structural deterioration in the software sector’s fundamentals. IGV’s top holdings include industry leaders with strong balance sheets and double-digit revenue growth: its largest position, Company A (Microsoft), delivered 22% year-over-year cloud revenue growth in Q4, while Company B (Adobe) reported a 19% rise in subscription bookings. Analysts project that the fund’s weighted average free-cash-flow yield of 4.8% and price-to-sales multiple of 6.3 remain attractive compared to historical averages, suggesting the current pullback may present a compelling entry point for patient investors.