by Kyle Woodley | December 11, 2013 8:00 am
This time a year ago, Wall Street was watching a fireworks show in disbelief as Apple (AAPL) spectacularly cruised through a multimonth nosedive. From its September 2012 peak around $700 to the end of the year, AAPL stock declined a then-unthinkable 24%, only to keep plunging through the first half of 2013 until it finally bottomed out under the $400 mark.
Total damage to AAPL stock: 45%, give or take.
But since its low-water mark in April, Apple has taken off by roughly the same measure — 45% — which has AAPL stock closer to $600 than $500. And while AAPL stock holders are certainly cheering, the joy is a bit wider than you might think.
Apple’s general popularity as a growth holding, as well as its enormous market cap, has made it an outsized part of numerous exchange-traded funds. Thus, when AAPL stock starts charging, many of these funds are given a sizable boost.
Of course, that dedication to Apple shares is a double-edged sword — a prolonged lull in AAPL stock has the very real possibility of holding these funds down.
Still, if you’re interested in riding Apple in hopes of another charge toward $700, these funds offer a way to hitch a ride but not be completely beholden to the tech giant’s whims:
AAPL Stock Weight: 17.95%
The iShares U.S. Technology ETF (IYW) is the biggest hoarder of AAPL stock, with nearly a fifth of the whole darn fund invested in the maker of iPhones and iPads.
The IYW — a fairly popular ETF at nearly $3 billion in assets — is tethered to the Dow Jones U.S. Technology Index, a market cap-weighted index containing a veritable who’s who of American tech companies. In addition to AAPL stock, you’ve got hot tech stocks like Google (GOOG), Microsoft (MSFT), IBM (IBM), Oracle (ORCL) … you get the point.
In fact, you get about all you can handle of the biggest ones.
While IYW holds 142 companies, nearly 67% of the fund can be found in its top 10. Not only is IYW fat in AAPL stock, but it also has 10%-plus weightings in GOOG and MSFT … meaning big moves in any of those three stocks will have an awfully outsized effect on the performance.
IYW charges 0.45% in expenses, or $45 for every $10,000 invested. The fund also offers a small dividend yield of 1.11%.
AAPL Stock Weight: 15.6%
At $13 billion in assets, the Technology SPDR (XLK) by State Street Global Advisors is the big kahuna of its respective space — which is something you can say about pretty much any Select Sector fund.
Like the IYW, the XLK is bursting at the seams with AAPL stock, sporting a 15.6% weighting in Apple currently. Like the IYW, XLK also gives big nods toward GOOG and MSFT, which hold respective weights of 9.1% and 8.9%. Also like the IYW, the lion’s share (63%) of this fund is found in the top 10 holdings, even though it has a nice, large number of holdings (74).
Unlike the IYW, which is almost entirely tech-focused, XLK has several “kind of” tech stocks in the communications and financial services industries as well. For instance, two top holdings in the VGT are AT&T (T) and Verizon (VZ), which make up a combined 10% of the fund. Also joining AAPL stock in the fund are Visa (V) and MasterCard (MA).
Longer-term, XLK has slightly underperformed the IYW, but it does offer a slightly higher yield at 1.74% than our first one-off AAPL investment. Expenses are a low 0.18%.
AAPL Stock Weight: 14.1%
You want cheap? Vanguard, as always, has cheap.
The Vanguard Information Technology ETF (VGT) is one of the most inexpensive ways to invest in the tech sector, and one of the cheapest fund-based ways to get a heaping helping of AAPL stock.
Specifically, Apple stock makes up 14% of the fund, followed by Microsoft stock and Google stock with, again, large positions at 8.1% and 8%, respectively. Much of the rest of the roster looks similar to IYW, though Visa makes a top 10 appearance at 2.9% of the fund.
VGT and IYW are fairly similar even beyond their AAPL stakes, though VGT is a little more diverse. It includes some tech-like financial services stocks such as the aforementioned Visa, as well as MasterCard. This fund’s performance over the past one-, three- and five-year time frames is a couple percentage points higher than IYW and XLK, too.
VGT has a healthy $4.27 billion in assets, and it’s not difficult to imagine why. I’d also say it probably has something to do with the mere pittance of an expense ratio, which at 0.14% edges out even the XLK. VGT also sports a roughly 1% yield.
AAPL Stock Weight: 13.74%
The iShares Global Technology ETF (IXN), as one would imagine, looks not just at the United States for its tech holdings, but across the entire world.
But consider it the Epcot of international funds, because it still has a thoroughly American feel.
Almost four-fifths of IXN’s holdings are in the U.S., while Japan lags by a country mile with just 6.1% of the fund. South Korea, Taiwan and Germany round out the top five countries at weightings of 4.4%, 3% and 2.4%, respectively.
Tipping the scales in the U.S. is, naturally, AAPL stock at nearly 14% of the fund, and — let me know when this starts to sound familiar — following it up are GOOG and MSFT at about 8% each. In fact, the only international stock in IXN’s top 10 is South Korea’s Samsung (SSNLF), at 4.4% of the fund.
IXN also offers little diversity outside of tech, so between that and its low international diversity, there’s not a ton setting IXN apart from its AAPL fund brethren here.
IXN’s performance is close but a bit lower than the other funds here, and it yield roughly 1% as wekk. It’s also the smallest at $677 million in assets. Expenses are 0.48%.
AAPL Stock Weight: 13.04%
The PowerShares QQQ Trust (QQQ) is another way to go if you’re looking to get top-heavy in AAPL stock, but …
… I’ve always viewed QQQ’s holdings as the investing version of what you eat when you get the drunk munchies. It’s whatever seems to be around, and would make no sense to a sober human being.
The QQQ tracks the Nasdaq-100, which is made up of the Nasdaq’s 100 largest non-financial stocks. As a result, QQQ is by far the least tech-oriented of these funds, with only a little more than half of the fund dedicated to the sector (and a monster chunk of that goes to AAPL stock). Another quarter of the fund is made up of consumer stocks such as Starbucks (SBUX) and Costco (COST). Then you’ve got a sizable 13%-plus stowed away in healthcare stocks like biotech firm Amgen (AMGN), or even Henry Schein (HSIC). It even holds Fastenal (FAST), which sells supplies like bolts and washers.
Thing is, there’s nothing wrong with fund diversity, but there’s no solid theme here. On one hand, it’s not as tech-focused as, say, IYW or VGT. On the other hand, and if you’re looking for diversity, it’s far more unbalanced than a simple index fund like the SPDR S&P 500 ETF (SPY).
Of course, maybe a bender hodgepodge is just the trick. QQQ has handily beat out the IYW and SPY in most standard time frames since its inception in 1999. QQQ also yields 1.1% in dividends, and also has a low expense ratio of just 0.2%
As of this writing, Kyle Woodley was long SPY and VGT.
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