How Much Apple Do You Need in Your ETF?

by: Gary Gordon

If we’re close to seeing 1000 U.S. exchange-traded products, what percentage of those ETFs or ETNs represent Apple (NASDAQ:AAPL)? The answer is… 10%.

There are more than 100 ETFs with exposure to tech’s best-known innovator. Most broad-based large-cap ETFs may have a 2% weighting. A variety of tech ETFs target 6%-8%. Yet there are number of exchange-traded investments with as much as 10%, 12%, even 16% in the big Apple.

Ten Popular ETFs With Noteworthy Exposure To Apple (AAPL)
% Weighting Approx 6-Month Return %
PowerShares Nasdaq 100 QQQ (QQQQ) 15.9% 13.7%
iShares DJ Technology (NYSEARCA:IYW) 9.9% 12.9%
SPDR Select Technology (NYSEARCA:XLK) 8.9% 10.9%
Vanguard Information Technology (NYSEARCA:VGT) 8.0% 13.1%
iShares GS Technology Sector (NYSEARCA:IGM) 7.8% 12.7%
iShares Global Technology (NYSEARCA:IXN) 7.5% 9.7%
iShares Morningstar Large Cap Growth (NYSEARCA:JKE) 7.2% 13.6%
Vanguard Mega Cap 300 Growth (NYSEARCA:MGK) 4.4% 12.7%
iShares S&P 500 Growth (NYSEARCA:IVW) 3.8% 11.9%
Vanguard Growth (NYSEARCA:VUG) 3.6% 13.5%

Three immediate observations come to the fore. First, the only tangible under-performance over the last 6 months resided with Global Tech (IXN). This, of course, is directly attributable to the weakness of the euro and weaker gains from foreign developed market stocks.

Second, there doesn’t seem to be a direct performance effect with more or less exposure to Apple… at least at first glance. With Apple gaining 28% in the same time frame, however, one might be able to make the case that PowerShares QQQ (QQQQ) topped the list due to its Apple weighting.

Third, large-cap growth ETFs, in general, approximated the super-sized gains of the QQQQs, yet they did so with broader U.S. market exposure. In my mind, that could be critical if the iPad isn’t the revolutionary product that many are betting on.

Anecdotally speaking, I wonder how many folks feel exactly the same way that I do. When the iPod, launched I wasn’t the first in line, but I knew that I wanted it. The iPod changed the way I would listen to music. When the iPhone launched, I wasn’t the first in line, but I knew that I wanted it. As much as I loved my Blackberry, the iPhone was about to change the way I “mobile-computed” via apps.

So why is it that i don’t know whether I even want or need the iPad?

Don’t get me wrong, Apple may still be the “bomb.” Yet I’d feel more comfortable with a broader tech sector fund or a broader large-cap growth fund than letting a portfolio rely too heavily on the QQQQs. Sometimes, there can be too much of a good thing.

Disclosure Statement: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company does not receive compensation from any of the fund providers covered in this feature. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.