The technology sector had a decent enough 2012, posting solid
gains over the time frame. However, this year, the sector has faced
some choppy seas leading to underperformance.
In fact, some are starting to think that the tech sector may
have lost its way. So much so that investors shifted their focus
from technology to other, better performing sectors (Three Great
Tech ETFs That Avoid Apple).
However, much of this pressure is due to a few key companies
experiencing uncertain trading. In particular, technology giant
Apple (AAPL) has been hampering tech returns
thanks to its terrible run over the past few months.
Shares of AAPL have been in quite the slump since
September, the last time the firm touched the $700/share mark. Now,
the company is below $400/share, marking a dramatic decrease for
the once-unbeatable technology company.
Attention now turns to the company’s earnings report and its
prospects for the future. Many are wondering if the company can
soothe investor fears and return to prominence at some point later
this year (3 Sector ETFs Surviving This Slump).
Apple Result in Focus
Since the last earnings announcement in January, Apple has been
stealing the headlines because of a series of bad performances.
Investors remained apprehensive about slowing growth, falling gross
margins, future product releases, and a lack of any clear plan that
returns additional cash to shareholders.
After reporting a series of disappointing results, Apple
recently reported its earnings for the March quarter which was in
line with expectations. The management appeared to be quite
confident as the company announced various measures to unlock
shareholder value.
Some of the key stats for the latest earnings release
include:
Earnings: $10.09/share actual vs. $10.00/share expected
Revenue: $43.60 billion actual vs. $42.33 billion expected
Also, Apple raised its limit for share buy back from $10 billion
to $60 billion and increased its dividend 15% to $3.05/shares.
Shares had been climbing in regular trading prior to the earnings
announcement, though they are sluggish in the trading session
immediately following the release (3 Apple Proof ETFs).
ETF Angle
In this uncertain scenario, it is important to remember which
ETFs have a big exposure to the tech giant. Thus, we have
highlighted three popular tech ETFs below that are heavily invested
in this technology company and look to be big movers depending on
how AAPL does in the near term:
PowerShares QQQ
(QQQ)
QQQ is an ETF which is highly dependent on Apple for its
performance. The fund has 11.55% exposure in Apple.
The ETF appears to have a rich asset base of $31.7 billion and
is a popular ETF among investors. QQQ trades at volume levels of
more than 53 million shares a day (Three ETFs with the Most Apple
Exposure).
The ETF is highly concentrated on its top ten holdings, taking
up about 49.68% of the assets, suggesting that the return of the
fund is much more dependent on these companies.
QQQ also pays a good 1.25% in annual dividends. The fund has
greater focus on large caps (26%) and a small part of it is
allocated towards mid caps securities.
Within the sector, Information Technology occupies the top
position in the basket with 59.59% share, while consumer
discretionary and health care make up the rest of the top three.
The product holds 100 securities in the basket, and it is a low
cost choice, charging a fee of 20 bps a year.
Technology Select Sector SPDR Fund
(XLK)
XLK has been designed to provide exposure to the large cap
segment of the technology sector. In this fund, Apple plays an
influential role to the extent that it takes up 12.81%.
The fund manages an asset base of $9.2 billion and trades at
volume levels of more than 12 million shares a day. The fund has a
dividend yield of 1.81% and charges investors an annual fee of 18
basis points (Is the Tech ETF Signaling Trouble Ahead?).
The fund appears to be concentrated in the top ten holdings with
62% of the asset base invested in the top ten choices. After Apple,
the next two positions are occupied by Microsoft and Google.
Vanguard Information Technology ETF
(VGT)
The fund manages a $2.7 billion asset base and provides exposure
to a large basket of 416 technology stocks. Although VGT seeks to
provide exposure to the entire technology sector — software,
hardware and Internet-- the fund appears to be tilted towards large
caps. Small allocations have also been made to mid caps and small
caps (Mid Cap ETF Investing 101).
Despite a broad exposure to technology stocks, VGT appears to be
concentrated in its individual holdings as the top 10 make up 60%
of the total asset allocated. This suggests that company specific
risk is pretty high in the fund, and that the top ten stocks
dominate the returns.
The highest fund allocation goes to Apple with 20.5% of its
assets invested in the company, which implies that the performance
of the fund is somewhat dependent on that company’s performance.
This is followed by International Business Machines Corp. and
Microsoft with asset investments of 7.5% and 7.4%, respectively.
This tech ETF charges an expense ratio of 14 basis points on an
annual basis.
iShares U.S. Tech ETF
(IYW)
The fund was launched in May 2000 and since then has managed to
build assets under management of $1.8 billion.
The product holds a total of 136 securities in which three tech
giants, Apple, Microsoft and International Business Corp, hold the
top three positions. The top three companies get a total allocation
of 34.6% but the fund does not appear to invest more than 8.94% in
any single stock of any other tech firm. On its own, Apple gets a
share of 15% in the fund.
The fund appears to be concentrated in the top 10 holdings with
more than 66.75% of the asset base invested in these securities.
IYW charges an expense ratio of 47 basis points from the
investor.
![](http://staticzacks.net/images/zacks/blogs/1366816676_scaled_425.jpg)
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30
Days. Click to get this free report >>
APPLE INC (AAPL): Free Stock Analysis Report
ISHARS-DJ TECH (IYW): ETF Research Reports
NASDAQ-100 SHRS (QQQ): ETF Research Reports
VIPERS-INFO TEC (VGT): ETF Research Reports
SPDR-TECH SELS (XLK): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days. Click
to get this free report
iShares US Technology ETF (AMEX:IYW)
Historical Stock Chart
From Aug 2024 to Sep 2024
iShares US Technology ETF (AMEX:IYW)
Historical Stock Chart
From Sep 2023 to Sep 2024