  Given any compact connected manifold $M$, we describe $C^2$-open sets of
iterated functions systems (IFS's) admitting fully-supported ergodic measures
whose Lyapunov exponents along $M$ are all zero. Moreover, these measures are
approximated by measures supported on periodic orbits. We also describe
$C^1$-open sets of IFS's admitting ergodic measures of positive entropy whose
Lyapunov exponents along $M$ are all zero. The proofs involve the construction
of non-hyperbolic measures for the induced IFS's on the flag manifold.
