A popular tech investment fund called the iShares Expanded Tech-Software Sector ETF (ticker: IGV) lost 12.13% of its value as of July 17, 2026. Over the past year, its price dropped 14.98%, landing near $94.13 per share as of July 7. The fund pays almost nothing in income to investors — its yield, which is like the interest a fund pays out, was essentially zero. That means the only way to make money in this fund is if the stocks inside it go up in price. Lately, they have not.

The damage spread beyond stock prices. US leveraged loans — these are loans made to companies that already carry a lot of debt, which makes them riskier — had their first losing month since April 2025 when January 2026 closed in the red. The weakness was concentrated in technology. By March, the amount of "distressed" software loans, meaning loans from borrowers struggling to repay, had jumped to a record $40.5 billion. That was nearly four times the $10.7 billion figure from before. Investor sentiment in the leveraged loan market was relatively weaker in early 2026 due to a high concentration of issuers in the software sector. US software stocks underperformed the S&P 500 — a broad measure of the overall stock market — by nearly 24 percentage points as of early February.

The price swings tell a story of a market that cannot find its footing. IGV closed at $91.06 on May 18, jumped to $93.81 on May 19, fell to $90.93 on May 20, and recovered to $92.21 on May 21. That is roughly a 3% back-and-forth in just four days. Money flowing in and out of the fund was just as jumpy: IGV saw daily net inflows of approximately $732.93 million on May 6, a one-day figure that dwarfs anything in the fund's typical pattern. Reuters reported a "strong rebound rally" in software shares prior to June 2, when those same shares declined while the S&P 500 and Dow closed modestly higher.

New leveraged loan issuance — the total amount of new loans handed out — reached $444.1 billion in Q1 2026, down 14% from $516.1 billion in Q1 2025. That is a meaningful drop in new lending. But the fourfold increase in distressed software-loan volume is the more telling figure. It signals that the credit problems were specific to the software sector rather than spread across the whole economy. The stress also moved from stocks into the loan market over the first quarter.

IGV's P/E ratio — a number that shows how much investors are paying for each dollar of a company's profits — was 35.23 as of June 30. That number is high compared to the broader market, even after the recent drops. It suggests investors are still paying a premium because they expect future growth that has not shown up in actual earnings yet. With the fund's yield near zero, there is no income to cushion any further price falls. The return depends entirely on whether the stocks in the fund go up.

The broader context here is a pattern that has been building since early 2026. Software lagged the overall market by 24 percentage points by early February, then had a sharp one-day 2% rebound, then a longer rally that Reuters called "strong," and then another drop on June 2 while the broader market held steady. That back-and-forth sequence, repeated at different scales, is the fingerprint of a sector caught between investors rethinking what these companies are worth and traders making short-term bets. The leveraged-loan market, with its heavy software exposure and record distressed volume, is telling a parallel story: the riskiest software borrowers are being priced for trouble faster than the stock selloff itself.

What remains separate from fact is any definitive cause. The verified data does not establish whether money shifting toward artificial intelligence investments is the main reason software is underperforming, or whether the trouble in software loans is a warning sign for stock investors. The fact that stock prices fell and loan quality deteriorated at the same time is established. The reason why — whether driven by companies cutting their profit forecasts, investors deciding tech stocks were too expensive, or automated trading systems pulling back from risky positions — is not.