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Apple shares were sinking ahead of its earnings report Tuesday after the bell, but if you’re looking for a way to play the stock into the results, the ETF market offers hundreds of ways to do it.
Yes, you read that right. Apple stock can be found in 253 exchange-traded funds, which include the Technology Select Sector SPDR Fund, or the XLK, the Fidelity MSCI Information Technology Index ETF, or FTEC, and the Invesco QQQ Trust.
It’s especially important for ETFs that allocate large portions of their portfolios to Apple’s stock. The XLK and FTEC, for example, each weigh Apple as over 15% of their holdings.
Click here for a full list of the 253 ETFs that currently hold Apple.
“A lot of this, really, is pick your ETF based upon your view of Apple,” Tim Seymour, founder and chief investment officer at Seymour Asset Management, said Monday on CNBC’s “ETF Edge.” “Ultimately, when you think about the QQQ ETF, which [tracks] the Nasdaq 100, and you still have Apple as only 10% of that weighting, you better have a view on Apple going into earnings. “
That view — slightly more of a bird’s-eye perspective than the heavily-Apple-weighted XLK or FTEC — may also help reduce some of the risk tied to Apple’s next report. But risk is a lesser concern for Seymour, who is bullish on Apple.
“I’m long Apple,” said Seymour, who also appears on CNBC’s “Fast Money” as a trader. “I believe that the services revenue profile is something that will continue to quietly move higher, even though I think it’s gotten a little too much exposure right now. I think you have to get back to a company that has enormous capital markets flexibility. They can actually continue to buy back shares and do things that will certainly boost the return profile. And I think, as we get into the third quarter, the iPhone shipments number is going to be something that people actually have to boost higher on their estimates.”
As for finding an Apple-holding ETF that’s right for you, there are several factors to consider, says Christian Magoon, CEO of Amplify ETFs.
“Certainly, for funds that have 17% or 15% of Apple exposure, Apple’s earnings are going to be very important. The other thing you need to look at is cost,” Magoon said in the same “ETF Edge” interview. “These ETFs all have different expense ratios. Looking at XLK, it’s got the most Apple exposure at 17%, but it’s priced at 13 basis points. Moving down, … FTEC is a 15% Apple exposure, but it’s priced at 8 basis points. So you have to weigh those factors — exposures and costs — when looking at the right ETF to play different companies’ earnings or exposures.”
Seymour had only one requirement.
“I’d like to be in an active ETF, just to be clear,” he said. “I think [they] can be both thematic and timely and tactical. So when I think about Apple, this is also a stock, frankly, that going into numbers has had a huge run.”
As such, an actively managed fund has a better chance at navigating any potential downward action should Apple’s results fail to uphold the Street’s expectations, Seymour said.
“At the end of the day, I’m a stock-picker. I want an ETF that I need to know what’s under the hood,” he said. “I think most investors are agnostic on what it costs them to own that unless it’s really an outlier. And I think, frankly, if I have a management team behind that ETF that’s doing good things on the active side, I’m willing to pay for that.”
Despite the decline on Tuesday, Apple shares are up nearly 30% for 2019.
