Just been digging into the archives and came across something worth revisiting - back in 2018, software ETFs were absolutely crushing it compared to the broader tech sector. The S&P North American Technology-Software Index was sitting at 28% gains while the general tech ETF XLK was only up 14%. That kind of divergence tells you something about where the real momentum was flowing.

What made software etfs so dominant that year? Cloud computing, cybersecurity, CRM platforms, and gaming - basically every enterprise software trend you could think of was firing on all cylinders. Corporate spending on software and services was projected to grow 6.2% annually, the strongest pace since 2007.

Let me break down the main plays that were working. IGV, the iShares North American Tech-Software ETF, was tracking that S&P index I mentioned and sitting on over $2 billion in assets. It's cap-weighted, so naturally dominated by the usual suspects - Salesforce, Microsoft, Adobe, Oracle accounting for a third of the fund's weight. The fund itself was up 28% that year, though you had to stomach a P/E ratio over 46.

If you wanted exposure without getting crushed by mega-cap concentration, XSW offered a different angle. This one used equal-weighting across 127 holdings, which meant your top 10 positions only made up about 9% of the fund. That smaller-stock tilt delivered nearly 25% returns with a more reasonable 25.30 P/E ratio.

Then there was PSJ, the Invesco Dynamic Software ETF, which used a whole different methodology - focusing on price momentum, earnings momentum, quality metrics. With just 30 holdings, it was way more concentrated than the other software etfs, yet still managed over 29% gains. Microsoft and Salesforce made up over 10% of that fund.

Cybersecurity was getting serious attention too. HACK was tracking the Prime Cyber Defense Index, pulling in companies offering hardware, software, consulting and services. Over 62% of its holdings were pure software plays. Back then, cyber attacks were causing $3 trillion in damages annually, with projections suggesting that could double to $6 trillion by 2021. That kind of threat environment meant serious spending was coming.

For those betting on gaming, GAMR was the vehicle - significant overlap with traditional software holdings like Electronic Arts, and it had more than doubled over the previous three years. Digital game downloads were climbing from 31% in 2010 toward 93% by 2021, so the tailwinds were real.

AIQ was a newer entry, debuting in May and tracking artificial intelligence and big data themes. Over 51% of its holdings were classified as software companies, and it had already accumulated $53 million in assets despite being brand new.

Cloud computing was another massive driver. SKYY gave exposure to that trend without requiring you to pick individual stocks. The cloud services market was projected to grow 21.4% that year alone. Companies like Microsoft and Amazon were riding that wave hard.

Looking back at that period, software etfs represented a genuine structural shift in where technology leadership was concentrated. The common thread across all these funds was robust demand for enterprise solutions across multiple verticals. Whether you wanted pure-play software exposure, narrower themes like cybersecurity or gaming, or emerging areas like AI and cloud computing, there were solid options available for capturing that trend.