DEFINITION of 'Business Software & Services Industry ETF'

An exchange-traded fund (ETF) that invests in business software companies, with the objective of replicating the performance of an underlying software index. A business software and services ETF includes companies engaged in a diverse range of business activities that are driven by software - from productivity and enterprise information management, to security and customer relationship management. These ETFs are better known as software ETFs.

BREAKING DOWN 'Business Software & Services Industry ETF'

A software ETF will outperform when business demand for technology is robust, which is the case when the economy is in growth mode. Software ETFs generally include U.S. giants such as Microsoft and Oracle, as well as smaller companies like Salesforce.com, Adobe Systems and Intuit. Depending on the index on which the ETF is based, the fund may hold U.S. software companies only, or may include overseas companies like SAP and Check Point Software as well.

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