Shares of Apple (NasdaqGS: AAPL), the largest U.S. company by market value, are up 19% this year and are flirting with all-time highs, but that has not sparked inflows to the exchange traded funds with heavy allocations to the stock. Until recently, that is.
Nearly 80 ETFs feature Apple as a top-10 holding, but a much smaller number can lay claim to being legitimate “Apple ETFs,” or those funds with hefty weights to shares of the iPhone maker. After struggling to attract and retain assets earlier this year, some Apple ETFs are gaining investors’ affection ahead of the California-based company’s July 22 earnings report. [Investors Tepid on Apple ETFs]
The PowerShares QQQ (NasdaqGM: QQQ), the NASDAQ-100 tracking ETF, sports an almost 13% weight to Apple or about 450 basis points more than the fund devotes to Microsoft (NasdaqGS: MSFT), its second –largest holding.
While QQQ has lost $2.7 billion this year, the recent trend has been more positive for one of the largest ETFs in the world. Over the past 90 days, QQQ has brought in almost $1.7 billion, $903 of which has come into the ETF over the past month, according to PowerShares data. Perhaps not coincidentally, shares of Apple are up more than 24% over the past three months.
The Technology Select Sector SPDR (NYSEArca: XLK) and the iShares U.S. Technology ETF (NYSEArca: IYW) have Apple allocations of 15% and 17.7%, respectively. Just this month, the two ETFs have hauled in a combined $253 million in new assets.
That after shedding a combined $874 million in the second quarter, a scenario that underscores the point that ETF flows data is not always instructive when it comes to performance. In the second quarter, Apple soared 20.1%, helping IYW and XLK to an average gain of 4.5%. [Tech ETFs Rise Ahead of Earnings Season]
Over the past three years, XLK’s correlation to Apple is 0.588, according to State Street data. That is not incredibly, which highlights the fact that ETFs like XLK and IYW are being boosted by more than just Apple. For example, Microsoft, Intel (NasdaqGS: INTC) and Qualcomm (NasdaqGS: QCOM) combine for about 16% of the ETF’s weight. Microsoft and Intel are up an average of 25% this year.
The Fidelity MSCI Information Technology Index ETF (NYSEArca: FTEC) is not old, it debuted last October, but it too is a credible Apple ETF with a 14.4% weight to the stock. FTEC’s growth has been exponential. At the end of April, the ETF had $89 million in assets, but $75 million has come into the ETF since the start of the second quarter. The ETF had $167.6 million in assets at the end of June.
Tom Lydon’s clients own shares of Apple, Microsoft and QQQ.