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For Immediate Release
Chicago, IL – May 3, 2012 - Stocks and funds in this article include: Apple (AAPL), iShares S&P North American Technology-Software Index Fund (IGV), PowerShares S&P SmallCap Information Technology Portfolio (PSCT), iShares MSCI ACWI ex-US Information Technology Sector Index Fund (AXIT). Eric Dutram looks at three ETFs in the tech space that don’t hold Apple but still might be great picks.
Three Great Tech ETFs That Avoid Apple written by Eric Dutram of Zacks Investment Research:
Thanks to its most recent earnings beat, Apple (AAPL) is once again an investor darling. The tech giant sees its price around the $600/share mark yet again, representing a nearly 100% increase from the stock’s 52 week lows.
Due to the sheer size of Apple from a market cap perspective, most investors have managed to benefit from this incredible trend. In fact, since Apple is not only one of the best performers in the S&P 500 but the largest firm in the index as well, pretty much everyone has seen at least part of Apple’s success trickle down into their personal portfolios either via an individual stock purchase or any number of broad based market funds.
Yet while AAPL’s performance has been incredibly impressive, the run-up in price by the world’s largest company has made the firm a huge component of virtually all the tech sector ETFs. For example, the California-based company accounts for nearly 19.3% of XLK and 18.7% in VGT, the two most popular tech ETFs on the market today (see Three Technology ETFs Outperforming XLK).
For investors who have bought into these funds—or broad large cap focused ETFs—and still hold Apple as an individual security as well, their concentration in the tech giant may be bordering on destructive at this point. Granted, this extra exposure in Apple has paid off handsomely in the past, one has to wonder just how long this trend can continue.
This isn’t to say that Apple shouldn’t be a part of a portfolio or that a sell order is demanded for any fund with an allocation to the tech giant. On the contrary, Apple seems to be a key component of many portfolios but there is only so much an investor should be willing to devote to a single stock (see more at the Zacks ETF Center).
If you are one of the people that are starting to get concerned about a potential over-allocation to Apple, but are still looking to maintain a large amount of exposure to the technology space, there are plenty of other tech ETFs to choose from. Below, we have highlighted three of these products that can provide investors excellent access to the high growth market while limiting a ‘doubling down’ issue on Apple at the same time:
For the rest of this ETF article, please visit Zacks.com at: http://www.zacks.com/stock/news/74257/three-great-tech-etfs-that-avoid-apple
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Contact: Eric Dutram