Investing in technology can be a roller coaster ride, with advances and discovery driving a market that likely has some hand in every aspect of our lives. One company that has dominated the space is the behemoth Apple (AAPL), whose innovation in the industry has propelled it to become one of investor’s top picks in the technology space. There is no denying that Apple has set the bar for future tech advances, but investors should be aware of how much they want to allocate to this superpower.For those who are bullish on this mega company, a heavy tilt towards Apple could provide some lucrative returns for your portfolio if the company continues to do well. This of course works both ways however; if Apple ever cools off from its hot streak, investors with big bets on the tech giant will likely get burned [see Free Report: How To Pick The Right ETF Every Time].
Investors looking for exposure to Apple, both overweight and underweight, may want to consider the following ETPs:
Dow Jones US Technology Index Fund (IYW)
IYW’s underlying index is designed to measure the performance of publicly-traded stocks in the technology sector of the U.S. equities market, and not surprisingly, Apple makes up a significant portion of this tech-focused ETF. With a whole quarter of IYW invested in Apple, this ETF is for the MAC addict who thinks the only way the company can go is up. Other major holdings include technology super powers like Microsoft, IBM, and Google, but even these three together only make up about a sixth of the portfolio [see High Tech ETFdb Portfolio].
Technology Select Sector SPDR (XLK)
A wider lens on the reaches of the technology sector, this ETF provides exposure to companies specializing in computers, software, telecommunication, semiconductors, IT services, and electronic equipment. Apple is the largest holding by far, making up about a fifth of the fund’s total assets, with the second largest holding, Microsoft, accounting for just over a fifteenth of the portfolio. Even with some exposure to other technology sub-sectors, such a heavy allocation to one company means Apple will have a large effect on the returns of XLK [see also ETFs To Bet Against Apple].
Information Tech ETF (VGT)
This ETF puts a unique twist on on the tech industry by focusing on the information technology sub-sector. Companies in this segment are often engaged in technology software development, information technology consulting and services, and hardware and equipment manufacturing and distribution. With over 400 holdings in this one ETF, Apple still manages to make an impact by accounting for approximately 19% of the VGT’s total assets; a clear majority holding, since no other individual security makes up more than roughly 8%. VGT is the youngest of the funds on our list of Apple-friendly ETFs, but it still has provided some stellar returns to its holders. And as long as Apple continues to grow, so will VGT.
Dynamic Technology (PTF)
This ETF is mostly dedicated towards technology, but a quarter of its funds are allocated to companies in a variety of sectors that have a hand in tech, such as industrials, financial services, and communication. The index PTF follows is designed to allocate funds to companies that satisfy a variety of investment criteria such as fundamental growth, stock valuation, investment timeliness, and other risk factors. As a result of PTF’s weighting methodology, the ETF has fairly even coverage of its chosen holdings, which means that Apple receives roughly the same weighting as the majority of the fund’s top ten holdings [see also Mortgage REIT ETFs: 10% Yields + Low Volatility].
Technology AlphaDEX Fund (FXL)
Another unique tech fund, FXL tracks an enhanced index that is maintained by the NYSE Euronext and applies First Trust’s proprietary AlphaDEX methodology to select stocks from the Russell 1000 Index. The AlphaDEX methodology involves ranking the firms on a variety of growth and value factors including momentum, ROE, and CF/P just to name a few. And as a result of this selection process, no company has more than a 3% stake in the fund. Apple is among FXL’s top ten holdings with its allocation of only 2%; other top holding include Western Digital Corp, SolarWinds, and AOL [see An In-Depth Look At Hypertargeted Technology ETFs].
S&P Equal Weight Technology ETF (RYT)
The index this ETF follows is an unmanaged equal weighted version of the S&P 500 Information Technology Index, making all 75 holdings only worth about 1.5% each, including major players like Google, Apple, and Yahoo. This ETF is an easy way to get even coverage of the entire technology sector, including industrial companies that play a large role at the production end. RYT’s equal-weighted methodology does, however, come at a higher price tag with its expense ratio being 32 basis points higher than XLK’s 0.18% fee.
Disclosure: No positions at time of writing.