ETF Trends
ETF Trends

AAPL to the Dow Jones Industrial Average” is the talk of the day today pushing the stock up about 1% and helping the Nasdaq-100, reference ETF tracker QQQ (PowerShares QQQ, Expense Ratio 0.20%)) hang in there in spite of flagging performance today in other key members.

This announcement of course was not an event completely out of left field, as we have been talking about the possibility of AAPL’s inclusion to the Dow, reference ETF tracker DIA (SPDR DJ Industrial Average, Expense Ratio 0.17%) since 2013 in various written pieces here.

At the time the limitation was the stock’s high price per share (pre-stock split) and the potential carnage it could have created in daily index calculation due to oversized price weighting).

Alas, AAPL has since split the stock and it trades with a $128 split adjusted handle today. In its current state AAPL would weigh in at about #5 in the DJIA, even though it is the largest stock by market capitalization in the world, and of course the largest weighted member in the S&P 500 Index at about (4.03%).

Because the DJIA is price weighted and not market cap weighted of course, V with its $272 handle, GS with its $188 handle, MMM $165 handle and IBM with its handle of $159 will have higher weightings in the index than AAPL, and thus more individual potential to impact the overall index price given the movements in the stocks.

AAPL bulls would probably argue that the stock will not be the fifth largest holding in the index forever if the stock continues its meteoric rise (+15.58% YTD, +68.26% in trailing one year period, +307.87% in trailing five year period) but the concerns that existed previously about inserting a $400 or $500 stock into the DJIA and having the index zig and zag unduly at times perhaps due to AAPL’s “overweight” are not really a concern the
way things set up here at the moment. AAPL’s index inclusion into the DJIA will be finalized by the open of trading on Thursday, March 19.

SPDR Dow Jones Industrial Average ETF

For more information on Street One ETF market commentary and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com

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