Yahoo Finance Take a Bite of These ETFs on Historic Apple's $3T Valuation
Apple Inc. AAPL made Wall Street history as the first company to reach a market capitalization of $3 trillion at the close on Jun 30, indicating the latest sign of the big tech unstoppable rally. This was the second time Apple's market value peaked above $3 trillion, with the first occurrence being on Jan 3, 2022, during intraday trading, but it closed the session just below that mark. The stock has jumped 49% so far this year.
Investors could capitalize on the tech giant’s strength with the help of ETFs having the largest allocation to it. Funds such as Technology Select Sector SPDR Fund XLK, Vanguard Information Technology ETF VGT, MSCI Information Technology Index ETF FTEC, iShares US Technology ETF IYW and Invesco QQQ QQQ have Apple as the top or second firm with a double-digit allocation and carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) (see: all the Technology ETFs here).
Signs of improving inflation and bets that the iPhone maker will successfully expand into new markets contributed to the surge. A report showed that an inflation index that the Fed closely monitors had dropped to its lowest level since April 2021, leading to expectations that the pace of interest rate hikes may slow down. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low. This has also contributed to the rise in Apple's stock.
Investors have flocked to the iPhone maker’s steady revenues and massive cash flows, reinforcing the reputation as a safe investment in a time of global economic uncertainty. This is especially true as the tech titan reported solid second-quarter fiscal 2023 results by beating estimates on both earnings and revenues, powered by a surprise boost in iPhone sales. Further, the company's management is known for being shareholder-friendly and buying back shares, which adds to the appeal.
The share price of Apple is further boosted by the launch of its augmented-reality headset on Jun 5. Moreover, Apple's entry into India’s market is expected to open new opportunities for the company, and a significant number of handsets due for an upgrade are also expected to provide a major boost (read: Apple ETFs in Focus Post Slew of Product Launch).
The latest multibillion-dollar deal with Broadcom (AVGO) to make 5G radio frequency components and wireless chips would add more strength to the Apple stock. Currently, Apple carries a Zacks Rank #3 (Hold) and a Growth Score of B, suggesting that the iPhone maker is primed for growth.
Apple stock is cheap, trading at a P/E ratio of 32.37 compared with Amazon’s (AMZN) 83.37 times, Netflix’s (NFLX) 39.14 times and Microsoft’s (MSFT) 35.31 times.
ETFs to Buy
Technology Select Sector SPDR Fund (XLK)
Technology Select Sector SPDR Fund targets the broad technology sector and follows the Technology Select Sector Index. It holds about 65 securities in its basket, with Apple making up for a 23.3% share. Technology Select Sector SPDR Fund has key holdings in software, semiconductors & semiconductor equipment, and technology hardware, storage & peripherals.
Technology Select Sector SPDR Fund is the most popular and heavily traded ETF, with AUM of $49 billion and an average daily volume of 6 million shares. The fund charges 10 bps in fees per year.
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF manages about $52.7 billion in its asset base and provides exposure to 325 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for a 21.7% share. Systems software, technology hardware storage & peripheral, semiconductors and application software are the top four sectors (read: Apple to Hit $4-Tn Market Cap in 2024? ETFs in Focus).
Vanguard Information Technology ETF has an expense ratio of 0.10%, while volume is solid at nearly 482,000 shares.
MSCI Information Technology Index ETF (FTEC)
MSCI Information Technology Index ETF is home to 360 technology stocks with AUM of $7 billion. It follows the MSCI USA IMI Information Technology Index. Apple accounts for a 22.3% allocation.
MSCI Information Technology Index ETF has an expense ratio of 0.08%, while volume is solid at 229,000 shares a day.
iShares US Technology ETF (IYW)
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 136 U.S. electronics, computer software and hardware, and informational technology companies. Apple makes up 19.2% of the assets.
iShares Dow Jones US Technology ETF has AUM of $12.6 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges 528,000 shares a day.
Invesco QQQ (QQQ)
Invesco QQQ provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Apple accounts for 12.6% share (read: Nasdaq Celebrates Best First Half in 40 Years: ETFs in Focus).
Invesco QQQ is one of the largest and most popular ETFs in the large-cap space, with an AUM of $197.5 billion and an average daily volume of 49 million shares. It charges investors 20 bps in annual fees.
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Apple Inc. (AAPL) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
