5 ETFs to play Apple's big rally
These funds give you a big, low-cost dose of exposure to the stock.
By Dan Burrows
Apple (AAPL) hasn't lost its shine just yet.
Wall Street went nuts for the company's quarterly results, sending Apple stock up as much as 6% on Wednesday, although it closed just over 5% higher. And make no mistake: That's an epic rally for a company as big as Apple.
The jump in share price added more than $23 billion in market value from the previous session. Hell, that's more than the entire market caps of Intuit (INTU) or Broadcom (BRCM). Indeed, with its market value back to more than $400 billion, Apple is once again within striking distance of displacing Exxon Mobil (XOM) as the world's biggest company.
Of course, one day's trading does not make a trend. Apple stock is by no means free and clear just because the market gobbled up the latest earnings news. But it sure is an encouraging sign for AAPL bulls.
True, that's of little solace to anyone who bailed out on the stock long ago. And who could blame them? Wednesday's action is nice and all, but Apple stock still is down almost 40% from a high of $700-and-change hit last September.
The thing is, if the tech sector part of your portfolio is diversified and low-cost (and all holdings should be diversified and low-cost), then you're still getting a decent-sized bite of Apple's hard-won gains.
That's because some of the largest, most popular tech exchange-traded funds count Apple as their top holding. (They have to. After all, Apple's massive market cap means it claims the No. 1 spot in any cap-weighted index and related tracking funds.)
As of July 3, there were five ETFs in which Apple was the top holding and accounted for more than 10% of the fund's weighting, according to ETF Database. Each one represents a great way to get relatively heavy, low-cost, diversified exposure to red-hot Apple stock.
Here's a quick rundown of the names:
iShares U.S. Technology ETF (IYW): Apple has a 15.2% weighting in IYW, the third most popular tech ETF, which comes as something of a relief this earnings season. The only other stocks with double-digit percent weightings are Microsoft (MSFT) and Google (GOOG), both of which seriously disappointed the Street with their own earnings reports. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
Vanguard Information Technology ETF (VGT): The second most popular tech ETF offers a bit more diversity than IYW, bringing Apple's weighting down to 13.6%. However, VGT has no other holdings accounting for more than 10% of fund. The No. 2 holding, International Business Machines (IBM), has a weighting of less than 8%.
Technology SPDR (XLK): With more than $11 billion in assets, XLK is by far away the biggest tech ETF, meaning Apple's 12.4% weighting here has the greatest implications for the largest number of traders and investors. Like IYW and VGT, the Technology SPDR counts Microsoft, Google and IBM among its top holdings.
iShares Global Tech ETF (IXN): Apple stock tops all holdings in the relatively small IXN with a weighting of 11.2%. In addition to the usual suspects of MSFT, GOOG, IBM and Intel (INTC), the Global Tech ETF also counts Apple's No. 1 rival Samsung (SSNLF) among its top 10 holdings, with a weighting of 4.3%.
Powershares QQQ (QQQ): If you like to hedge your tech bets with a broader swath of growth stocks, there's a good chance you hold the QQQ. Tracking the 100 largest non-financial companies listed on the Nasdaq, the Powershares QQQ is the most popular large-cap growth equity ETF by a wide margin. Apple's the biggest stock on the Nasdaq, meaning the 11.2% weighting as of July 3 certainly grew after Wednesday's action.
As of this writing, Dan Burrows didn't hold a position in any of the aforementioned securities.
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