Apple's Slide Exposes Flaws In Some ETFs (AAPL, QQQ, IYW)

Earlier this month, Benzinga examined the impact Apple
AAPL
is having on select ETFs that offer
excessive weights to the tech juggernaut
. It was a cautionary tale and our interview with Street One Financial President Scott Freeze highlighted an important fact: All is fine and dandy for an ETF or mutual fund with substantial Apple exposure as long as the stock keeps going up. Whether it's just a breather before starting a new leg higher or legitimate cause for concern, Apple has not been moving higher. The stock has slid almost 6% since our piece on April 4 and nearly 7% since April 10. The pain for ETFs with exposure to Apple that can be considered dangerously large has been predictable. Yes, it should be noted that Google
GOOG
, the largest U.S. Internet search provider, has slumped since delivering earnings last Thursday and announcing a controversial new share structure. In other words, Google's woes have served as icing on the cake for tech ETFs suffering from something that just a few weeks ago was helping them: Obscene weights to Apple. The iShares Dow Jones US Technology Index Fund
IYW
, the ETF with the largest weight to Apple at 22.16%, is almost 2% since April 10. Google also figures somewhat prominently in this ETF with a weight of 6.3%. If IYW violates support at the 50-day moving average right around $75, the ensuing decline could be nasty. The PowerShares QQQ
QQQ
is also fighting to hold support at its 50-day line. Apple accounts for 19.1% of QQQ's weight, so it's not surprising to see the fund down 2.3% in the past five days including today. Different ETF, same problems: Big weight to Apple and fighting to hold its 50-day moving average. That's what's happening now with the Technology Select Sector SPDR
XLK
, which features a 19.3% weight to Apple. XLK is down 1.7% since April 10. The obscure FocusShares Morningstar Technology ETF
FTQ
, a valid
Apple play in its own right
is being hurt by that validity. An almost 21% weight to the iPad maker has FTQ down almost 2% in the past five days. How about equal-weight ETFs with Apple exposure? As we noted earlier this month, the First Trust NASDAQ-100 Equal Weight ETF's
QQEW
returns compared to the likes of QQQ and XLK were pretty good considering QQEW offers relatively scant exposure to Apple. The stock accounts for just 1.06% of QQEW's weight, making it the fund's seventeenth-largest holding. That puts Apple behind the likes of Starbucks
SBUX
, Baidu
BIDU
and Priceline
PCLN
to name a few. Overall, that's not a bad thing as QQEW has outperformed the other ETFs mentioned here in recent days. Then again, that just means being less bad as the equal-weight fund is down 1.6% since April 10. For more on Apple-related ETF matters, please click
HERE
.

Posted In: Long IdeasNewsSector ETFsBroad U.S. Equity ETFsShort IdeasSpecialty ETFsTechnicalsIntraday UpdateMarketsMoversTechTrading IdeasETFs

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