3 ETFs That Hate Apple (AAPL) Right Now – XLK VGT IYW

Whenever I am asked about which exchange-traded funds have the most exposure to a specific stock — say, on a day where Apple Inc. (NASDAQ:AAPL) is turning south quickly — I turn to my friends at ETFdb.com. Their free stock exposure tool is an excellent way to quickly assess the weight of any given company within the ETF universe.

3 ETFs That Hate Apple (AAPL) Right Now - XLK VGT IYW

Source: ©iStock.com/TimArbaev

In the case of a ubiquitous stock like AAPL, which is the largest publicly traded company in the U.S., the list of funds is lengthy. Technology sector ETFs are a given. However, there are also a surprising number of dividend indices, diversified large-cap themes and other factor-based options to consider.

I have written extensively about how the composition and position sizing of the underlying holdings in an ETF is paramount to how it will perform. With that in mind, let’s look at iShares Dow Jones US Technology (ETF) (NYSEARCA:IYW), Vanguard Information Technology ETF (NYSEARCA:VGT) and the Technology SPDR (ETF) (NYSEARCA:XLK) — the top three funds with the highest exposure to AAPL.

iShares U.S. Technology ETF (IYW)

If you are a true fanatic, the No. 1 ETF on the list is ishares’ IYW. This ETF currently has 15.6% of its portfolio dedicated to Apple stock as the largest holding.

IYW also tracks 138 other U.S.-based tech companies that span virtually all market cap sizes. This includes well-known names such as Microsoft Corporation (NASDAQ:MSFT) and Facebook Inc (NASDAQ:FB).

IYW ETF chart

Despite the diversified number of holdings, IYW is going to be primarily driven by the performance of its top 10 constituents. Nevertheless, it’s more diversified than owning an individual stock and can potentially spread your risk over multiple areas of the technology sector. It is also worth noting that this ETF comes with a relatively high expense ratio of 0.44% for a passively managed sector fund.

Technology Select Sector SPDR (XLK)

The XLK is probably more well-known by ETF enthusiasts.  This technology benchmark is the next highest-ranked option for Apple exposure with 13% of its portfolio dedicated to the company. XLK contains 75 large-cap technology companies from within the S&P 500 and has $13.3 billion in assets under management.

This fund is likely going to be a more liquid and heavily traveled alternative than IYW because of its tenure. XLK debuted in 1998 as one of the first sector-focused ETFs and charges a relatively low expense ratio of 0.14%.

Vanguard Information Technology ETF (VGT)

Lastly,Vanguard’s VGT is an option for low-cost index investors. VGT has 12.6% of its portfolio exposed to AAPL stock. It also encompasses 380 other stocks in the technology sector and charges an expense ratio of just 0.1%.

Similar to its peers, the majority of the VGT portfolio is driven by its top components despite its highly diversified nature.

The Bottom Line

It’s not often that an individual stock takes such a prominent role in a single sector of the economy. The size advantage of Apple, combined with its global brand appeal and healthy financial characteristics, make this company a unique outlier.

The aforementioned ETFs allow you to have a significant stake in the performance of AAPL without the typical business risk that accompanies direct share ownership.

David Fabian is Managing Partner and Chief Operations Officer of FMD Capital Management. To get more investor insights from FMD Capital, visit their blog.

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