After much salivating and speculation and anticipation, Verizon’s long-awaited version of the iPhone is finally here. But will it matter to telecom exchange traded funds (ETFs)?
Unlike when AT&T (NASDAQ: T) launched the iPhone under its then-exclusive deal with Apple (NASDAQ: AAPL), customers aren’t flooding Verizon (NASDAQ: VZ) stores to snap up the new phone, says Reuters.
It’s too soon to call it a dud, though. After all, Apple plans to launch another iPhone this summer, and Verizon customers could be rolling the dice to see whether it will come to their network, too. Others may still have time left on their AT&T contracts, and early termination fees on smartphones can cost more than the phones themselves. And still others may want to see if the exodus to Verizon is enough to make AT&T’s network a little more reliable.
The impact on ETFs isn’t exactly clear, either. But here are a few things to look for as the smartphone wars play out are:
- Verizon and AT&T may cancel each other out. If you want to play this, perhaps ETFs that are heaviest in one or the other may be a better bet. AT&T’s largest weight in a fund is in the Telecom HOLDRs (NYSEArca: TTH), of which it accounts for 50% of the weight, while Verizon is 28.5% of the fund. If you’d rather own less of AT&T and more of Verizon, not many ETFs deliver a significant edge. First Trust Morningstar ETF (NYSEArca: FDL) gives a slight edge to Verizon with 10.2% of the fund, but AT&T is 9.4%.
- The real winner? Apple. No matter which network comes out ahead on this race, the only surefire winner is Steve Jobs & Co. PowerShares QQQ (NASDAQ: QQQQ) gives a hefty 20.8% of its weight to Apple. If that’s too rich, Technology Select Sector SPDR (NYSEArca: XLK) weights Apple at 12.3%.
For full disclosure, Tom Lydon’s clients own shares of AAPL.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.