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ETFs in Focus on Soaring AirPods and Apple Watch Sales

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Apple Inc. (AAPL - Free Report) has been continuously diversifying revenue base. Currently, the company’s popular wearable products are likely to witness strong growth in 2019 and beyond. Apple’s AirPod and Watch have been gaining traction among consumers. In fact, Apple is expected to ship around 60 million AirPods in 2019 (per a Bloomberg report), improving massively from 16 million sold in 2017.  This is likely to result in a contribution of around $12 billion in revenues in 2019.

Moreover, the company is expected to witness significant demand for AirPods Pro that was launched in October 2019. In fact, AirPods sales are estimated to touch the 100 million units mark in 2020, which is likely to lead to $20 billion in revenues.

Ever since the launch in 2015, Apple Watch has witnessed impressive rise in market share that improved from 14.1% in the fourth quarter of 2015 to 29.6% and 27.4% in 2017 and 2018, respectively. Apple Watch is now believed to enjoy a market share of 47.9% in the smartwatch segment, per a Market Realist article. Per IDC, a market research company,  Apple Watch shipments are expected to rise by 10.8% year over year in 2019 to shipments of 51 million units from around 46.2 million units in 2018.  Thus, the Apple Watch segment is expected to contribute around $23 billion to revenues in 2019.  Going by the estimated figures, it seems like, AirPods and Apple Watch will jointly contribute around $35 billion to total revenues in 2019.

Moreover, Apple recently reported robust fourth-quarter fiscal 2019 results, wherein it topped both earnings and revenue estimates and offered an upbeat holiday quarter outlook. Revenues from Wearables, Home and Accessories, which includes the Apple Watch, AirPods, HomePod, Apple TV, and Beats headphones, soared 54% to $6.52 billion, while Pad revenues improved 16.9% to $4.66 billion (read: Take a Bite of Apple With These ETFs Post Solid Q4 Results).

ETFs to Tap

CEO Tim Cook is optimistic about the holiday quarter given the positive buzz surrounding iPhone 11, AirPods Pro, Apple TV+ service and the company’s video game service — Apple Arcade. Given this, investors could consider the following ETFs with the largest allocation to the tech titan. These funds have Apple as the top or second firm with a double-digit allocation and sport a Zacks Rank #1 (Strong Buy) with a Medium risk outlook.

Select Sector SPDR Technology ETF (XLK - Free Report)

This most-popular technology ETF has $24.91 billion in AUM and charges 13 bps in fees per year from investors. AAPL makes up for roughly 19% of assets (read: Are Apple ETFs in for Trump Trade Ahead?).

MSCI Information Technology Index ETF (FTEC - Free Report)

With AUM of $2.88 billion, the product allocates 17.7% in Apple. The ETF has 0.08% in expense ratio (see: all the Technology ETFs here).

iShares Dow Jones US Technology ETF (IYW - Free Report)

This ETF provides investors exposure to technology stocks with 16.9% allocation in Apple. The fund has AUM of $4.53 billion and charges 42 bps in fees and expenses.

Vanguard Information Technology ETF (VGT - Free Report)

This fund manages about $23.35 billion in its asset base with 17.4% allocation in Apple. It has 0.10% in expense ratio.

Invesco QQQ (QQQ - Free Report)

This ETF provides exposure to the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization and Apple accounts for 12.1% share. It has AUM of $80.88 billion and charges 20 bps in annual fees (read: 10 Top-Ranked ETFs Beating S&P 500 This Year).

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