Apple’s (NasdaqGS: AAPL) market cap has grown so large that the stock accounts for more than 20% of some exchange traded funds tracking the technology sector.
For example, Apple alone represents 20.1% of iShares Dow Jones US Technology (NYSEArca: IYW), which holds about $1.6 billion in assets.
Apple shares traded over $550 on Monday to a new all-time high. The company’s market cap exceeds $500 billion.
“This astonishing public valuation has had some unexpected effects that investors should be aware of: chief among them is the risk of overconcentration, as a great many indices and the ETFs that track them are weighted by market cap,” writes Dave Fry at ETF Digest.
Apple shares have rallied nearly 40% the past three months.
Fry points out that Guggenheim S&P 500 Equal Weight Technology (NYSEArca: RYT) is one sector ETF that isn’t dominated by Apple because it uses an equal-weighted strategy rather than market cap.
Here are some other ETFs with large stakes in Apple, according to XTF.com:
- PowerShares QQQ (NasdaqGM: QQQ): 17.4%
- Vanguard Information Technology (NYSEArca: VGT): 17.1%
- Technology Select Sector SPDR (NYSEArca: XLK): 17.6%
Full disclosure: Tom Lydon’s clients own AAPL.
Story updated to correct RYT fund name.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.