There seems to be no looking back for the tech behemoth Apple Inc (NASDAQ:AAPL). The share prices of the world’s largest company have been riding high since the start of the year on a slew of good news that promises growth. Apple shares have delivered outstanding returns of nearly 50% in the year-to-date frame.
In fact, Apple’s share prices have recently made an all-time high of $119.75 and hit a staggering $700 billion for its market cap, buoyed by the success of its iPhone 6 series smartphones, which debuted late September. The company saw brisk sales of its new bigger screen iPhones and sold a record 10 million iPhone 6 and iPhone 6 Plus handsets in the first weekend of its availability
What’s in Store This Holiday Season?
Most of the analysts believe that this holiday season, which kicked off with Black Friday, is expected to go down in Apple’s history for blockbuster iPhone sales. The company’s latest product lineup of new iPhones – iPhone 6 and iPhone 6 Plus – are expected to be a big hit this season, thanks to a strengthening economy and buoyant consumer spending.
Low natural gas prices will further loosen the purse strings of the holiday makers. Moreover, the company is greatly benefiting from its recently launched mobile digital payment system – Apple Pay (read: Big Screen Apple iPhones See Record Sale: 3 Tech ETFs to Buy).
A certain lack of imagination from its rivals Samsung (LONDON:0593xq) and Google (NASDAQ:GOOGL) has also added to Apple’s advantage. Some of the features like a bigger screen, sleeker form factor and enhanced screen resolution are expected to make these products the most popular Apple iPhone lineup ever.
Analysts believe that the strong sales of the premium iPhone 6 Plus will be an important driver for the company’s profitability over the next couple of quarters. Also, the December quarter is traditionally the most lucrative for the company in terms of iPhone sales. A brokerage firm recently noted that Apple plans to dole out 60 million to 65 million iPhone units for the fourth quarter.
In fact, overall spending on mobile devices and consumer electronics is expected to increase by 2.5% this holiday season as per the Consumer Electronics Association.
Goodies on Offer/ Ethics in Mind
Apple, in a recent press release, said that its customers will receive an iTunes gift card with the purchase of select Apple products as part of its promotional efforts for the 2014 World AIDS Campaign.
Also, the company announced its plans to donate a portion of retail and online sales on Black Friday and Cyber Monday to (RED), the global non-profit organization in the fight to cure AIDS.
ETFs to Consider
Expectations of higher iPhone sales this season have led most of the analysts to revise their target prices upward, spreading optimism for the stock. Further, the stock has a Zacks Rank #1 or Strong Buy rating, adding to its bullishness.
Below, we have highlighted ETFs that have the largest allocation to this industry giant and have returns that are directly related to the rise and fall of Apple.
iShares Dow Jones US Technology (NYSE:IYW)
IYW is also quite popular in the tech space with AUM of $5.1 billion while charging 43 bps in fees and expense. Moreover, the fund trades in good volumes of roughly 550,000 shares a day.
The product tracks the Dow Jones US Technology Index, giving investors exposure to a basket of 145 stocks. Apple occupies the top position in the basket with 20% of assets. The product is heavily skewed toward the technology hardware and equipment segments, as these make up half of the portfolio. Software and computer services take the remaining portion in the basket. The fund has added nearly 20% in the year-to-date frame.
SPDR Select Sector - Technology (NYSE:XLK)
XLK is the most popular product in the technology space and tracks the S&P Technology Select Sector Index, managing an asset base of $12.9 billion. This fund trades in heavy volume of roughly 9.4 million shares and charges 16 bps in fees per year from investors. In total, the fund holds about 71 securities in its basket. Of these firms, AAPL takes the top spot, making up roughly 17.3% of the assets.
In terms of industrial exposure, the fund is widely spread across hardware storage & peripherals, software, IT services, Internet software & services and diversified telecom services that make up for double-digit allocation. The fund is up over 12.3% year to date.
Vanguard Information Tech (NYSE:VGT)
This fund manages about $6.6 billion in assets and trades with moderate volumes of roughly 350,000 shares. VGT provides exposure to a large basket of 412 technology stocks by tracking the MSCI US Investable Market Information Technology 25/50 Index.
Even here, AAPL is the top firm with 14.8% allocation. From a sector perspective, technology hardware & storage takes the largest share at 22%, closely followed by software & programming (20%) and Internet & mobile applications (16%). VGT has added 18% year to date and charges 0.14% in expense ratio.