ETFs to Play an Apple Inc. Rebound

Shares of Apple Inc. AAPL took their biggest one-day hit since January last week after concerns of the iCloud hacking incident spread. The stock was one day removed from an all-time high and was up 13 of the last 14 sessions and therefore a sizable pullback should not be a major surprise.

The day after the sell-off the stock was able to attract some buying even though analyst, Pacific Crest, suggested investors sell the shares.

How To Play A Rebound

Investors looking to gain some exposure to the stock after the five percent haircut could take a less risky approach by buying an ETF that has a large exposure to the stock. This strategy will allow an investor to benefit from an Apple bounce and also lower risk with diversification from stocks in other sectors.

The iShares U.S Technology ETF IYW, for example, tracks 141 stocks in the electronics, computer software and hardware, and technology sectors. With just under 35 percent of the total weight of the fund in its top three holdings, success is based largely on this trio. Those holdings are Apple, at 18.7 percent, Microsoft Corp. MSFT at 10.2 percent, and IBM IBM at 5.5 percent. The ETF has performed very well of late, and is up 30.7 percent over the last 12 months and 11 percent over the last six months.

By comparison, the Vanguard Information Technology ETF VGT follows 412 technology stocks, easily making it one of the most diverse tech ETFs. It has a slightly less consolidated top three than its iShares counterpart at 28 percent, but has a similar make up. Apple is the top holding (14.8 percent), followed by Microsoft (8.4 percent) and Google (8 percent). The ETF has gained 29 percent in the last 12 months and is up 9.4 percent over the six-month period.

The Powershares QQQ QQQ and SPDR Select Sector Technology ETF XLK are 

was one of the first technology ETFs ever available on the market. It consists of 100 technology stocks with its top ten holdings making up 45 percent of the total fund.  Its top three holdings are the same as VGT with AAPL at 13.1 percent, MSFT at 8.2 percent, and GOOG coming in at 4.3 percent. QQQ is currently up 30 percent in the last year and has gained 10 percent over the last half year.

The  tracks 73 technology stocks and is the most evenly distributed fund in proportion to its size. Like the other ETFs highlighted, XLK has AAPL as a top holding in the mid teens, at 15.4 percent followed by MSFT at 8.7 percent, and Verizon Communications Inc. VZ with a 5.4 percent allocation. XLK has performed the worst over the last year out of the four ETFs with a 26.6 gain, and has a comparable six-month increase of 10.3 percent.

All four ETFs offer investors exposure to an AAPL rebound with IYM having the largest concentration. The Vanguard ETF, VGT, could be the best option as it has AAPL as the top holding, but also has the best diversification throughout the remainder of the portfolio.