Apple Falls As Report Indicates Weak Demand: ETFs In Focus

Shares of Apple Inc fell after the release of a report that stated the demand for iPhone 8 is substantially lower compared to its previous models.

Factors Driving the Stock

Per a Bloomberg article, citing Rosenblatt Securities analyst Jun Zhang’s report, pre-order volumes for iPhone 8 are a lot lower than that of iPhone 7 and iPhone 6. Pre-order volume in China on JD.com reached 1.5 million in the first three days for the iPhone 8 compared with 3.5 million for iPhone 7 (read: Apple ETFs to Watch on 10th-Anniversary iPhone Launch).

The report also led to declines in stocks of companies that supply components to Apple. Moreover, Apple acknowledged an issue with its latest Apple watch series 3 that offers GPS and optional cellular connection. Multiple reviewers faced issues with cellular connectivity which is the primary new feature this year. The company stated that it is trying to fix the problem with a future software release.

Adding to the agony, most reviewers found that using the cellular connectivity option on the Apple watch is a drain on battery life. Thus the problems are not worth an upgrade at $10 a month.

Shares of Apple fell almost 1.7% at market close on Sep 20, 2017. However, it is still up 37.5% in a year and 34.4% year to date.

In the current scenario, we believe it is prudent to discuss the following ETFs that focus on providing exposure to Apple (see all Technology ETFs here).

Technology Select Sector SPDR Fund XLK

XLK is a relatively cheaper bet on the technology sector. This fund has AUM of $17.74 billion and charges a fee of 14 basis points a year. From a sector look, Software, Internet Software and Services and Technology Hardware Storage & Peripherals have the highest exposure to the fund, with 20.11%, 18.85% and 17.06% allocation, respectively (as of Jun 30, 2017). Apple Inc (NASDAQ:AAPL) , Microsoft Corp (NASDAQ:MSFT) and Facebook Inc (NASDAQ:FB) are the top three holdings of the fund, with 14.7%, 10.6% and 7.5% allocation, respectively (as of Sep 20, 2017). The fund has returned 23.5% in a year and 20.5% year to date (as of Sep 20, 2017). XLK currently has a Zacks ETF Rank of #2 (Buy) with a Medium risk outlook.

iShares U.S. Technology ETF IYW

This fund provides exposure to the U.S. technology sector. It has AUM of $3.69 billion and charges a fee of 44 basis points a year. From a sector look, Software & Services, Technology Hardware & Equipment and Semiconductors & Semiconductor Equipment have the highest exposure to the fund, with 53.2%, 26.7% and 18.8% allocation, respectively (as of Sep 19, 2017). Apple Inc, Microsoft Corp and Facebook Inc are the top three holdings of the fund, with 17.4%, 12.4% and 8.7% allocation, respectively (as of Sep 19, 2017). The fund has returned 25.7% in a year and 23.2% year to date (as of Sep 20, 2017). IYW currently has a Zacks ETF Rank of #1 (Strong Buy) with a Medium risk outlook.

Vanguard Information Technology ETF (HN:VGT)

This fund is one of the most popular bets on the technology sector in the U.S. It has AUM of $14.7 billion and charges a fee of 10 basis points a year. From a sector look, Internet Software & Services, Technology Hardware, Storage & Peripherals and Systems Software have the highest exposure to the fund, with 19.9%, 16.9% and 14.2% allocation, respectively. Apple Inc, Alphabet Inc (NASDAQ:GOOGL) and Microsoft Corp are the top three holdings of the fund, with 14.8%, 10.0% and 9.5% allocation, respectively (as of Aug 31, 2017). The fund has returned 26.7% in a year and 23.9% year to date (as of Sep 20, 2017). VGT currently has a Zacks ETF Rank of #2 with a Medium risk outlook (read: Top-Ranked ETFs That More Than Doubled the S&P 500 This Year).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>