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3 ETFs To Play For Microsoft's Earnings

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3 ETFs To Play For Microsoft's Earnings

Microsft Corporation (NASDAQ: MSFT) reports fiscal fourth-quarter results after the close of U.S. markets today, a noteworthy event because, among other reasons, the company is the second-largest in the U.S. by market capitalization, trailing only Apple Inc. (NASDAQ: AAPL).

Analysts expect Microsoft to report earnings per share of $1.37 on sales of $36.5 billion. The company previously guided for revenue of between $35.85 billion to $36.80 billion.

Among the marquee things analysts and investors will be monitoring are growth in the Azure cloud business, benefit assigned to Xbox on the back of gamers gaming more amid shelter-in-place orders and how Office and related Teams and SharePoint are performing as more folks work from home.

Microsoft earnings are also significant in the world of exchange-traded funds because 300 ETFs feature exposure to the stock. Here are three that could be in the spotlight on the back of the looming earnings update.

See Also: Microsoft Q4 Earnings Preview: Azure Key To Growth

Technology Select Sector SPDR

The Technology Select Sector SPDR (NYSE: XLK) is an excellent way to play mega-cap tech earnings — specifically reports from Microsoft and Apple — because the fund devotes over 43% of its weight to those two tech titans.

Alone, Microsoft commands 21.72% of XLK's weight. Said another way, the fund's third- through eighth-largest holdings would have to be combined to exceed the weight assigned to Microsoft. Indeed, the big allocations to Microsoft and Apple are meaningful because XLK is up 18.32% year to date.

iShares U.S. Technology ETF

Like the aforementioned XLK, the iShares U.S. Technology ETF (NYSE: IYW) features Microsoft and Apple as its top two holdings and for some size as that pair combines for 38% of the fund's weight.

However, that's not the only reason why IYW delivers returns that vary wildly from XLK. The Dow Jones U.S. Technology Capped Index — IYW's index — still classifies Facebook (NASDAQ: FB) and Alphabet (NASDAQ: GOOG) as technology stocks whereas, but officially those names reside in the communication services sector.

Xtrackers MSCI U.S.A. ESG Leaders Equity ETF

In an effort to add some non-tech variety, the Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (NYSE: USSG) is being included here. Overweighting tech is commonplace among environmental, social and governance (ESG) ETFs and USSG does just that with a 34.49% weight to the technology sector. That includes a more than 11% weight to Microsoft.

Home to $2.39 billion in assets under management, USSG is one of the largest ESG ETFs not issued by iShares and one of the cheapest with an annual fee of just 0.10%, or $10 on a $10,000 investment.

 

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