Blasphemy: Equal-Weight Apple? (AAPL, QQQE, RYT)

Considering how ugly the broader market is today, the fact that Apple

is down just 1% with 30 minutes in the trading day isn't too shabby. One day and a 1% decline does not represent a break in what has become one of the most impressive single-stock bull trends in recent memory. That's a good thing because so many investors have not only been drawn to Apple shares, but to various ETFs

. Rather than incurring the potential downside risks of an ETF that features a large weight to Apple such as the PowerShares QQQ

, Technology Select Sector SPDR

or the iShares Dow Jones US Technology Index Fund

, the ETF with the largest allocation to Apple, the evidence is compelling regarding equal-weight ETFs with only modest weights to the iPhone maker. After highlighting the risks posed to investors by

Street One Financial President Scott Freeze talked with Benzinga today and continued to extol the virtues of equal-weight ETFs over those funds that bulging at the seams with Apple. Freeze favors the First Trust NASDAQ-100 Equal Weighted Index Fund

. Apple accounts for just 1.02% of QQEW's weight and isn't even among the ETF's top-30 holdings, but even with a significantly lower weight to Apple than QQQ or XLK QQEW "is actually performing better on the upside than one would expect and the downside risk isn't as high," Freeze said in the interview. One potential risk to those that are long ETFs such as QQQ and XLK is the possibility of major indexes such as the Nasdaq 100 rebalancing, which it did last year, to lower Apple's weight. Freeze notes a snowball effect could take place. "When an index is reweighted, there are sell orders from every ETF and mutual fund that hold Apple," Freeze said. "There could be 10 million Apple shares for market-on-close orders when the stock is trading at $620 and that could lead to Apple closing at $595. It's hard to find the offsetting order flow for 10 million-share orders." (Note this is a hypothetical example.) Of course, that would create selling pressure in ETFs, but sizable orders to sell Apple would impact the likes of QQQ and XLK more than QQEW, according to Freeze. Year-to-date, QQEW has trailed QQQ by less than 5% and XLK by less than 3%. The First Trust NASDAQ-100-Tech Index Fund

, which isn't an equal-weight ETF, is up over 16% year-to-date despite an allocation of just 2.42% to Apple. In other words, investors aren't giving much away in terms of performance to lower their exposure to Apple-specific risks. As Freeze said "Investors buy ETFs to avoid single-stock risk. Apple as one-fifth of an ETF defeats the purpose." Freeze also mentioned the newly minted Direxion Nasdaq 100 Equal Weighted Index Shares ETF

as possible option for investors looking for an equal-weight approach to the Nasdaq 100. QQQE debuted in late March. Another option to consider is the Guggenheim S&P Equal Weight Technology ETF

. Apple is RYT's second-largest holding at1.59%, trailing the 1.68% Red Hat

garners. Still, RYT was up more than 17% year-to-date at the start of trading today.