Thanks to its most recent earnings beat,
is once again an investor darling. The tech giant sees its price
around the $600/share mark yet again, representing a nearly 100%
increase from the stock's 52 week lows.
Due to the sheer size of Apple from a market cap perspective,
most investors have managed to benefit from this incredible trend.
In fact, since Apple is not only one of the best performers in the
S&P 500 but the largest firm in the index as well, pretty much
everyone has seen at least part of Apple's success trickle down
into their personal portfolios either via an individual stock
purchase or any number of broad based market funds.
Yet while AAPL's performance has been incredibly impressive, the
run-up in price by the world's largest company has made the firm a
huge component of virtually all the tech sector ETFs. For example,
the California-based company accounts for nearly 19.3% of
and 18.7% in
, the two most popular tech ETFs on the market today (see
Three Technology ETFs Outperforming XLK
For investors who have bought into these funds-or broad large
cap focused ETFs-and still hold Apple as an individual security as
well, their concentration in the tech giant may be bordering on
destructive at this point. Granted, this extra exposure in Apple
has paid off handsomely in the past, one has to wonder just how
long this trend can continue.
This isn't to say that Apple shouldn't be a part of a portfolio
or that a sell order is demanded for any fund with an allocation to
the tech giant. On the contrary, Apple seems to be a key component
of many portfolios but there is only so much an investor should be
willing to devote to a single stock (see more at the
If you are one of the people that are starting to get concerned
about a potential over-allocation to Apple, but are still looking
to maintain a large amount of exposure to the technology space,
there are plenty of other tech ETFs to choose from. Below, we have
highlighted three of these products that can provide investors
excellent access to the high growth market while limiting a
'doubling down' issue on Apple at the same time:
iShares S&P North American Technology-Software Index
This ETF focuses in on the software side of the technology
world, completely forgoing exposure to companies like Apple and its
hardware brethren. Instead, the product tracks the S&P North
American Technology-Software index which produces a fund that has
54 holdings in total (See
Mid Cap ETF Investing 101
Current top holdings include
, while from a style perspective, growth firms dominate. Investors
should also note that the product is tilted towards large caps
(58%), although mid caps (28%), and small caps (14%) do receive
decent allocations as well.
This tech ETF charges investors 48 basis points a year for its
exposure while seeing volume of about 130,000 shares a day. This
helps to produce a relatively tight bid ask spread, keeping total
costs low in this Apple-avoiding product.
PowerShares S&P SmallCap Information Technology
If investors are looking to limit their exposure to the world's
largest company but still hold assets in the broad U.S. tech space,
it only makes sense to look at the small cap segment instead. This
can be done by looking at PSCT an ETF that follows the S&P
SmallCap 600 Capped Information Technology Index (read
For Japan ETFs, Think Small Caps
This benchmark holds 128 securities in total and gives investors
a pretty even split in terms of small cap and micro cap securities.
For sectors, semiconductors take the top spot at 26% while software
(20%), and electronic components (18%) round out the top three.
Growth again dominates from a style look, although value securities
do account for about one-fourth of the total as well.
Despite the small cap focus, this tech ETF is relative cheap,
charging investors just 29 basis points a year in fees. Thanks to
this, and the relatively tight bid ask spread, investors can expect
low total costs in this sector ETF.
iShares MSCI ACWI ex-US Information Technology Sector
Index Fund (
Although Apple may have a global reach, the fact remains that
the firm is still a U.S. company. As a result, investors can gain
global tech exposure without Apple's influence by inspecting any of
the ex-US products that are in the space.
One way to do this is to look at one of the few internationally
focused tech ETFs that are on the market today, including AXIT.
This ETF tracks the MSCI All Country World ex USA Information
Technology Index which is a cap weighted benchmark of companies in
both the developed and emerging world (read
Three Overlooked Emerging Market ETFs
Currently, the ETF holds 84 stocks in its basket,
including top weightings to Samsung, Taiwan Semiconductor
), and SAP AG (
). This strategy helps to product a product that has a tilt towards
the semiconductor industry (36%), while electronic components
(22%), and software (10%) round out the top three from an industry
In terms of countries, Asian nations dominate; Japan (29%),
Taiwan (20%), and South Korea (15%), take the top three spots
followed by Germany and then China to round out the top five.
Meanwhile, from a cap and style look, blend securities account for
nearly half the portfolio while large caps have an even bigger
stranglehold on the capitalization of the fund as these securities
make up 78% of the fund.
Unfortunately, the international focus does produce a relatively
expensive fund as the fee comes in at 48 basis points a year. While
this isn't too bad, the real cost comes from the wide bid ask
spread, as roughly 700 shares changes a day. Thanks to this low
level but the relatively high liquidity of underlying securities,
investors will be able to get into the product but may have to pay
for the exposure by sharply raising their target price.
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