S&P Likes 2 Tech ETFs, Lukewarm on Another
Those traders not living in a cave by now that Apple (NASDAQ: AAPL) has been having a rough go of things lately. Shares of the largest U.S. company by market value are off almost five percent in the past week and have tumbled 6.8 percent in the past month.
Even with the recent weakness in Apple and what appear to be moves to dead money status by large-cap technology names such as Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ), the tech sector has generally treated investors well this year. That much is evident by the performance of some marquee technology ETFs, including the PowerShares QQQ (NASDAQ: QQQ).
Year-to-date, QQQ, which is home to a 17 percent allocation to Apple, has jumped 18.5 percent. In a new research note, S&P Capital IQ highlighted QQQ and a pair of other tech ETFs. The research firm rates the $30.88 billion QQQ Overweight.
Other top holdings in QQQ, which is also known as the Nasdaq 100 tracking ETF, include Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN). Earlier this week, NASDAQ OMX (NASDAQ: NDAQ) announced Facebook (NASDAQ: FB) will be joining the Nasdaq 100, meaning shares of the social media giant will also join QQQ's lineup.
S&P Capital IQ also has an Overweight rating on the Technology Select Sector SPDR (NYSE: XLK), which the research firm called the "most pure" of the three ETFs highlighted in the note. What that means is XLK is the most heavily allocated to pure-play technology names of the three ETFs S&P evaluated.
XLK, which is the least expensive tech ETF in terms of annual fees (just 0.18 percent), has gained 13.5 percent this year. The $8.99 billion ETFs devotes nearly 18 percent of its weight to Apple. Among XLK's top-10 holdings are six Dow components, including International Business Machines (NYSE: IBM), Microsoft, AT&T (NYSE: T), Verizon (NYSE: VZ), Cisco (NASDAQ: CSCO) and Intel (NASDAQ: INTC).
S&P Capital IQ has a Marketweight rating on the iShares Morningstar Large Growth Index Fund (NYSE: JKE). Like QQQ, JKE is not a pure play tech fund, but it is heavily allocated to names from that sector. JKE devotes nearly 37 percent of its weight to technology issues and six of its top-10 holdings are tech stocks.
That includes Apple at over 13 percent of JKE's weight. Combined, Apple, IBM, Google, Oracle (NASDAQ: ORCL), Qualcomm (NASDAQ: QCOM) and Amazon represent more than 31 percent of JKE's weight. The $447 million ETF has gained 16.1 percent this year.
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