The surge in Apple (NasdaqGS: AAPL) shares has resulted in the stock again growing within the Nasdaq-100 despite an index change last year designed to cut its weight in the tech-heavy benchmark.
Apple, with a market cap of about $475 billion, accounts for nearly 17% of the popular Nasdaq index, which is tracked by the $33 billion PowerShares QQQ (NasdaqGM: QQQ).
When a stock’s weighting in a target benchmark grows so large, its moves can have an outsized impact on the index fund or ETF.
In 2011, Nasdaq announced a “special rebalance” of the Nasdaq-100 that would result in Apple’s weight being cut from over 20% to about 12%. [Nasdaq Alters Index After Surge In Apple Shares]
Apple’s share of the index has increased alongside the seemingly unstoppable rally in the stock, which recently broke above $500 for the first time. There is speculation the seller of iPhones and iPads may soon announce a dividend. The revenue machine is sitting on a mountain of cash.
Apple shares are up roughly 26% year to date.
Apple’s headline-grabbing rally has contributed to the 13.2% gain for PowerShares QQQ so far this year, compared with the 7.7% rise in the S&P 500, according to Morningstar.
In the dot-com boom of the late 1990s, the Nasdaq-100 was altered to reduce the weighting of some tech giants. The move allowed the Nasdaq-100 to meet ETF diversification rules.
During the late 1990s, Microsoft grew to around 24% of the index and Intel accounted for roughly 15%. In December 1998, the first special rebalance of the index occurred to lower the weights of these and other names, said Nasdaq spokesman Wayne Lee in an email.
Apple shares rose 1.3% to $516 in Wednesday’s premarket trade.
PowerShares QQQ
Full disclosure: Tom Lydon’s clients own AAPL.