How to buy Apple for nowhere near $600

These ETFs have huge AAPL holdings at a fraction of the full share price.

By InvestorPlace Mar 20, 2012 9:32AM

By Kyle Woodley

 

Want to get into Apple (AAPL)? Get ready to fork over 600 clams.

 

Good grief.

 

At this point, the Cupertino, Calif., behemoth's growth is all but unstoppable, especially with the new iPad now available at Apple stores and the appeal of the recently announced Apple dividend.

 

But at this point, it's getting almost ridiculous for the everyday investor to bite into the AAPL. $600 a share? Throw in an additional 50 bucks and you can buy a new iPad and download the full Beatles box set from iTunes. True, they won't make you rich down the road, but you'll at least feel like you're getting your money's worth.

 

But the lighter-of-wallet don't have to be left out of Apple. Just look toward exchange-traded funds. Almost 4% of all AAPL shares outstanding are held in ETFs, according to XTF.com, and Apple stock makes up almost 20% of some funds. So if $600 is a bit out of your price range, here are five funds you can use to play AAPL -- without going broke.

 

Select Sector Technology SPDR (XLK): Just what it sounds like, the Technology SPDR fund holds S&P 500 technology companies in a number of fields, such as information technology, telecom and semiconductors. AAPL shares make up a hefty 18.4% of the fund, and you also get exposure to other tech giants such as Microsoft (MSFT), IBM (IBM) and Google (GOOG) -- for $30, a mere fraction of AAPL's share price. And even its expenses are bargain-basement at a mere 0.18%. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

 

IShares Dow Jones U.S. Technology (IYW): IYW is a heavy Apple hitter, weighting the stock at more than 21%. Unlike XLK, it tracks the Dow Jones U.S. Technology Index, but the premise is the same: broader technology companies. Intel (INTC) joins Google, IBM, Microsoft and Apple in the iShares fund's top five holdings. IYW can be bought for around $77 per share, and its 0.47% expense ratio is about average for its category.

 

PowerShares QQQ (QQQ): QQQ tracks the Nasdaq 100, so while it's heavily weighted with technology companies, it also holds media titan News Corp. (NWS) and java master Starbucks (SBUX). Still, Apple is the big kahuna, making up 18.3% of the fund, and you can buy QQQ shares for around $67, along with a scant 0.2% expense ratio.

 

Vanguard Information Technology ETF (VGT): Another tech ETF tracking the U.S. Investable Market Information Technology 25/50 Index, which includes tech stocks of all sizes. Apple holds a 17%-plus weighting in the VGT, with the usual list of big names following suit. VGT trades around $74 per share and charges just 0.19% in expenses.

 

IShares Morningstar Large Growth (JKE): Large Growth is the least tech-heavy of these options, though Apple still carries about 16% weight with the group. JKE tracks the Morningstar Large Growth Index, which focuses on large-cap stocks that are determined to have above-average growth potential. While techs still dominate, the top holdings also include beverage giant Coca-Cola (KO), oilfield services company Schlumberger (SLB) and energy stock Occidental Petroleum (OXY). Shares trade for around $76, and JKE has a light 0.25% expense ratio.

 

Kyle Woodley is the assistant editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley.

 

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11Comments
Mar 20, 2012 8:05PM
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To use this man's logic, I can use the Fairholme Fund to get a hold of Berkshire Hathaway A shares at an incredibly steep discount.  To paraphrase...

 

But at this point, it's getting almost ridiculous for the everyday investor to invest with Warren Buffett. $122,200 a share? Throw in an additional 50 bucks and you can buy a new Porsche Carrera 4 GTS (open top). True, it won't make you rich down the road, but you'll at least feel like you own that road.

 

After all, Berkshire Hathaway A shares make up 6% of the fund, and Fairholme Fund shares go for $30 apiece.  If you do the math, 17 shares will buy you more than a full "share" of Berkshire Hathaway A stock – as well as stakes in AIG, Sears Holdings Corporation, and Bank of America—for $510, just 0.4% of BRK-A's price. Its expenses are just OK at 1.01%, but consider what you are getting!

Mar 20, 2012 10:37AM
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Why go to the party when it's over?
Mar 20, 2012 2:11PM
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Fail!  18.4% of  $30 is  $5.52.  So... when you buy one share of XLK you are investing $5.52 in AAPL.  That means to be invested in the equivalent of one share of AAPL you need to own roughly 109 shares of XLK.  109 x 30 = 3270,  18.4% of 3270 = 601.68 which is about what AAPL is trading at.  Your claim that 6 shares of XLK gets you a share of AAPL is just plain misleading.  Buying 6 shares of XLK gets you about $33 worth of AAPL or about .055 of one share.
Mar 20, 2012 1:12PM
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This article is misleading because you do not get AAPL for less than the actual price.
You may get however a small fraction of a share if you buy a small amount of the EFT.
This is also a misplaced add for EFT's with an argument that makes no sense.
Mar 20, 2012 3:45PM
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n00b - Sure you can. Look at XLK's holdings. 18.4% of their holdings ( in dollars) is in AAPL shares. Therefore, 18.4% of your investment dollars in XLK are buying AAPL.  So if you buy 1 share of XLK for $30, that means you are getting .184 x 30 = $5.52 worth of AAPL.  If AAPL is selling for $600 per share, then you are getting  5.52/600 = .0092 shares of AAPL for each share you buy of XLK at these current prices. So the author's 6 shares of XLK will get you .0092 x 6 = .0552 shares of AAPL.  These values will of course change as the price of AAPL moves. Also, XLK could buy or sell shares of AAPL which would change the 18.4% - but they would need to report that in their holdings information.To do these calculations you don't need to know the exact number of shares XLK outstanding or exact number of shares they own of AAPL if they are telling you what % AAPL is in their fund. That's why percentages are used to begin with.
Mar 20, 2012 2:08PM
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Wow, does this writer really not understand that the six shares of the ETF will still only create a fractional share position in Apple related to the amount of overall investment in the ETF?  6 shares of the ETF at $180 would mean that 18.4% of that $180 is invested in AAPL, or only $33 of AAPL.  Buying six shares of the ETF only gets you about 1/20 of a share of AAPL (along with fractional holdings in the other members of the ETF pool).
Mar 20, 2012 3:51PM
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Kyle, I'm sure glad your not my advisor. Bush 41  would call this "fuzzy math". 
Mar 20, 2012 11:30PM
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Hey, they changed the article and dropped the "fuzzy math!"  Good job!
Mar 21, 2012 11:24AM
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Vixx- That's just wrong.  Yes, when you buy 1 share of XLK, 18.4% of that share is Apple.  That still doesn't tell you how much Apple you've bought, and Apple's share price is irrelevant.  How much Apple you have bought depends on how many shares of Apple the fund owns (and not what percentage of the fund the Apple holdings make up, which can change depending on the relative value of Apple against the rest of the funds holdings).  Do you really not get that?
Mar 21, 2012 9:56AM
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I tried to post a meaningful comment but the server said it contained a link or was similar to spam.  Neither was correct.
Mar 20, 2012 3:04PM
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VixxRino- Actually, you can't know how many shares of XLK will buy you a share of AAPL without knowing how many shares of AAPL the fund owns and how many shares of XLK are outstanding.
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