Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

When Apple (AAPL) Swings, Tech ETFs Follow

Tue, Nov 27, 8:16 AM ET, by Michael Johnston

Originally created for buy-and-hold investors looking for cost-effective ways to diversify their portfolios, ETFs have gained popularity among active traders as well; these financial instrument have proven to be responsive and liquid, serving as viable trading vehicles for those looking to implement any number of shorter-term strategies. With innovation also comes complexity, however, and ETFs are no different, as some of these financial instruments bear greater company-specific risk than others [Download Free Report: How To Buy The Right ETF Every Time].

Consumer electronics giant Apple (AAPL) is no stranger to the headlines; this stock is loved by countless active traders given its tendency to stage massive price swings in either direction. Bullish and bearish speculators alike have demonstrated their infatuation with this industry giant as shares of Apple trade upwards of 21 million times every day. Furthermore, many investors maintain heavy exposure to this stock through their technology ETFs whether they realize it or not [see High Tech ETFdb Portfolio].

In fact, of the several dozen ETFs that maintain exposure to Apple, each of the top nine funds feature double-digit allocations to this tech juggernaut. As expected, when Apple’s stock is firing on all cylinders Technology ETFs are usually in green territory; likewise, when shares of Apple are tanking, a large number of tech funds are likely getting dragged into the red [see Why You Never Judge A Fund By Its Cover].

Beware of the Apple Effect

Just how much influence does Apple’s performance have on some of the more concentrated tech ETFs? Short answer: a significant amount. To get a better understanding of the term “company-specific risk,” it pays to take a look at Apple’s performance relative to the ETF that affords the greatest weight to this stock; in this case, the contender is the iShares Dow Jones U.S. Technology Index Fund (IYW, A), which holds Apple in the number one spot, dedicating just over 23% of its total assets to this stock alone.

Click to Enlarge

Consider the performance chart between IYW and AAPL above; it’s fairly evident how this ETF closely tracked the return patterns of shares of Apple leading up to its peak in mid-September. When selling pressures hit Apple, this ETF, not surprisingly, followed lower, although it’s certainly worth noting that it held its ground better than the stock thanks to its (somewhat) diversified portfolio [see also 3 ETF Plays For Technology Growth Stocks Flying Under The Radar].

When it comes to raw performance figures consider the following: since recently peaking at $705.07 a share on September 21, 2012, shares of Apple have shed nearly 16% as of November 26, 2012. By comparison, IYW has lost 9% over this same time period, highlighting the “red” side of the so-called “Apple Effect.” On the other hand, Apple can also have a very positive impact on tech ETFs when shares are climbing; even after its recent correction, Apple is still up 45% year-to-date, while IYW is up just over 10%, once again highlighting the sway that this industry giant has on the technology sector, if not the entire market as a whole [see 101 ETF Lessons Every Financial Advisor Should Learn].

Given the market cap-weighted approach employed by most passive, index-based, exchange-traded funds, having exposure to Apple is more or less inevitable thanks to its sheer size. For those looking to tap into the tech sector while steering clear of major allocations to Apple, there are some products worth a closer look. The Rydex S&P Equal Weight ETF (RSP, B+) allocates roughly 0.20% of total assets to Apple given its equal-weighted strategy while the fundamentally-based First Trust Large Cap Core AlphaDEX Fund (FEX, B) dedicates less than one half of one percent of its portfolio to the well-known behemoth.

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Follow me on Twitter @SBojinov

Disclosure: No positions at time of writing.

Click here to read the original article on ETFdb.com.


SDI Glossary: "Alpha" Definition
SDI Glossary: "Bullish" Definition
SDI Glossary: "price" Definition
SDI Glossary: "ETFs" Definition
SDI Glossary: "iShares" Definition
SDI Glossary: "Short" Definition
SDI Glossary: "Stock" Definition
This Article's Word Cloud:   AAPL   Apple   Click   ETFdb   ETFs   Effect   Every   Fund   September   Technology   allocations   also   assets   better   exposure   funds   giant   have   into   investors   less   looking   maintain   market   more   number   over   performance   portfolio   risk   shares   some   specific   stock   tech   technology   term   than   thanks   that   their   these   this   those   time   total   traders   weighted   when   while

| More

TMF Crosses Below Key Moving Average Level
Mon, May 4, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the Daily 20+ Year Treasury Bull 3x Shares ETF ...

PLND Makes Bullish Cross Above Critical Moving Average
Mon, May 4, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the Poland ETF (PLND) crossed above their 200 day ...

BKLN Makes Bullish Cross Above Critical Moving Average
Mon, May 4, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the PowerShares Senior Loan Portfolio ETF (BKLN) crossed above ...

PowerShares 1-30 Laddered Treasury Portfolio Breaks Below 200-Day Moving Average - Notable for PLW
Mon, May 4, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the PowerShares 1-30 Laddered Treasury Portfolio ETF (PLW) crossed ...

VGLT Crosses Below Key Moving Average Level
Mon, May 4, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the Vanguard Long-Term Government Bond ETF (VGLT) crossed below ...

UBT Crosses Below Key Moving Average Level
Mon, May 4, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the ProShares Ultra 20+ Year Treasury ETF (UBT) crossed ...

Shares of TMF Now Oversold
Mon, May 4, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the Daily 20+ Year Treasury Bull 3x Shares ETF ...

UBT Crosses Critical Technical Indicator
Mon, May 4, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the ProShares Ultra 20+ Year Treasury ETF (UBT) entered ...

TLT Crowded With Sellers
Mon, May 4, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the iShares 20+ Year Treasury Bond ETF (TLT) entered ...

Shares of AMPS Now Oversold
Mon, May 4, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the iShares Utilities Bond ETF (AMPS) entered into oversold ...

ILTB Crosses Critical Technical Indicator
Mon, May 4, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the iShares Core 10+ Year USD Bond ETF (ILTB) ...

HYG: ETF Outflow Alert
Mon, May 4, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: HYG Exchange traded funds (ETFs) trade just like stocks, but ...

AAXJ: ETF Inflow Alert
Mon, May 4, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: AAXJ Exchange traded funds (ETFs) trade just like stocks, but ...

VTV: Large Inflows Detected at ETF
Mon, May 4, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VTV Exchange traded funds (ETFs) trade just like stocks, but ...

Praxair, Inc. a Top Ranked SAFE Dividend Stock With 2.3% Yield (PX)
Mon, May 4, 8:24 AM ET, by ETF Channel

Praxair, Inc. (PX) has been named to the Dividend Channel ''S.A.F.E. ...

CRDT Crosses Below Key Moving Average Level
Fri, May 1, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the WisdomTree Strategic Corporate Bond Fund** ETF (CRDT) crossed ...

PowerShares S&P SmallCap Consumer Staples Portfolio Breaks Below 200-Day Moving Average - Notable for PSCC
Fri, May 1, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the PowerShares S&P SmallCap Consumer Staples Portfolio ETF (PSCC) ...

iShares Core U.S. Aggregate Bond Breaks Below 200-Day Moving Average - Notable for AGG
Fri, May 1, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the iShares Core U.S. Aggregate Bond ETF (AGG) crossed ...

CMBS Makes Notable Cross Below Critical Moving Average
Fri, May 1, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the iShares CMBS ETF (CMBS) crossed below their 200 ...

Shares of PZA Now Oversold
Fri, May 1, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the PowerShares National AMT-Free Municipal Bond Portfolio ETF (PZA) ...

HYMB Crosses Critical Technical Indicator
Fri, May 1, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the SPDR Nuveen S&P High Yield Municipal Bond ETF ...

ITR Crosses Below Key Moving Average Level
Fri, May 1, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the SPDR Barclays Intermediate Term Corporate Bond ETF (ITR) ...

Affiliated Managers Group Takes Over #10 Spot From Actavis
Fri, May 1, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

PowerShares BuyBack Achievers Portfolio Experiences Big Inflow
Fri, May 1, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: PKW, FOXA, TWX, LOW Exchange traded funds (ETFs) trade just ...

MUB Crowded With Sellers
Fri, May 1, 11:14 AM ET, by ETF Channel

In trading on Friday, shares of the iShares National AMT-Free Muni Bond ETF (MUB) entered ...

XOP, CLNE, EPE, RRC: ETF Inflow Alert
Fri, May 1, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XOP, CLNE, EPE, RRC Exchange traded funds (ETFs) trade just ...

BSV: Large Outflows Detected at ETF
Fri, May 1, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: BSV Exchange traded funds (ETFs) trade just like stocks, but ...

PIN, TCS, SSLT, ITC: ETF Inflow Alert
Fri, May 1, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: PIN, TCS, SSLT, ITC Exchange traded funds (ETFs) trade just ...

VEA, KOSS, MFD, CEL: ETF Inflow Alert
Fri, May 1, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VEA, KOSS, MFD, CEL Exchange traded funds (ETFs) trade just ...

ICF Makes Notable Cross Below Critical Moving Average
Thu, Apr 30, 4:14 PM ET, by ETF Channel

In trading on Thursday, shares of the iShares Cohen & Steers REIT ETF (ICF) crossed ...

PSR Crosses Below Key Moving Average Level
Thu, Apr 30, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the PowerShares Active U.S. Real Estate Fund ETF (PSR) ...

iShares Real Estate 50 Breaks Below 200-Day Moving Average - Notable for FTY
Thu, Apr 30, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the iShares Real Estate 50 ETF (FTY) crossed below ...

PTH Crosses Critical Technical Indicator
Thu, Apr 30, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the PowerShares DWA Healthcare Momentum Portfolio ETF (PTH) entered ...

FXG Crosses Critical Technical Indicator
Thu, Apr 30, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the First Trust Consumer Staples AlphaDEX Fund ETF (FXG) ...

INDL Crowded With Sellers
Thu, Apr 30, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the Daily India Bull 3x Shares ETF (INDL) entered ...

PCY Crosses Below Key Moving Average Level
Thu, Apr 30, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the PowerShares Emerging Markets Sovereign Debt Portfolio ETF (PCY) ...

Endo International Achieves #93 Analyst Rank, Surpassing Hartford Financial Services Group
Thu, Apr 30, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

XPH Crosses Critical Technical Indicator
Thu, Apr 30, 11:34 AM ET, by ETF Channel

In trading on Thursday, shares of the SPDR S&P Pharmaceuticals ETF (XPH) entered into oversold ...

iShares MSCI Indonesia Getting Very Oversold
Thu, Apr 30, 11:34 AM ET, by ETF Channel

In trading on Thursday, shares of the iShares MSCI Indonesia ETF (EIDO) entered into oversold ...

VNQ Crosses Below Key Moving Average Level
Thu, Apr 30, 11:24 AM ET, by ETF Channel

In trading on Thursday, shares of the Vanguard REIT ETF (VNQ) crossed below their 200 ...

VCSH Crosses Below Key Moving Average Level
Thu, Apr 30, 11:24 AM ET, by ETF Channel

In trading on Thursday, shares of the Vanguard Short-Term Corporate Bond ETF (VCSH) crossed below ...

First Trust Utilities AlphaDEX Fund (FXU) Shares Cross Below 200 DMA
Thu, Apr 30, 11:14 AM ET, by ETF Channel

In trading on Thursday, shares of the First Trust Utilities AlphaDEX Fund ETF (FXU) crossed ...

India Consumer (INCO) Shares Cross Below 200 DMA
Thu, Apr 30, 11:14 AM ET, by ETF Channel

In trading on Thursday, shares of the India Consumer ETF (INCO) crossed below their 200 ...

DRN Crosses Below Key Moving Average Level
Thu, Apr 30, 11:14 AM ET, by ETF Channel

In trading on Thursday, shares of the Daily Real Estate Bull 3x Shares ETF (DRN) ...

IWP, KR, NFLX, VRTX: ETF Outflow Alert
Thu, Apr 30, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IWP, KR, NFLX, VRTX Exchange traded funds (ETFs) trade just ...

Vanguard FTSE Emerging Markets ETF Experiences Big Inflow
Thu, Apr 30, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VWO, EC, YZC, CCU Exchange traded funds (ETFs) trade just ...

KBWB: ETF Outflow Alert
Thu, Apr 30, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: KBWB Exchange traded funds (ETFs) trade just like stocks, but ...

SDS: Large Inflows Detected at ETF
Thu, Apr 30, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: SDS Exchange traded funds (ETFs) trade just like stocks, but ...

PSL Crosses Critical Technical Indicator
Thu, Apr 30, 10:54 AM ET, by ETF Channel

In trading on Thursday, shares of the PowerShares DWA Consumer Staples Momentum Portfolio ETF (PSL) ...

11.8% of XSLV Holdings Seeing Recent Insider Buys
Thu, Apr 30, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the PowerShares S&P SmallCap Low Volatility Portfolio ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

When Apple (AAPL) Swings, Tech ETFs Follow | Self Directed Investor | Copyright © 2008 - 2015, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.