With One Exception, Apple ETFs Calm Ahead Of Earnings

On Tuesday, Apple Inc. AAPL, still the largest U.S. company by market capitalization, reports fiscal fourth-quarter earnings.

“The iPhone and Apple Watch maker will post earnings of $1.91 per share for its fiscal fourth quarter, if Estimize's consensus forecast is accurate. That would be up from $1.42 per share in the year-ago period. Wall Street is looking for EPS of $1.88 for the quarter, as well as $9.13 for the full year,” reports Benzinga. 

Few if any earnings reports are as widely anticipated and highly scrutinized as Apple's. Plus, the company faces heady earnings competition as rivals Amazon.com Inc. AMZN, Alphabet Inc. GOOG and Microsoft Corp. MSFT delivered boffo results last week. Not to mention, analysts and investors will be eagerly listening to what the iPhone maker has to say about December quarter iPhone sales estimates.

With all that to consider, it is arguably surprising that Apple-heavy exchange traded funds have recently been docile, at least in terms of inflows. Perhaps the best of saying that is “Inflows?” because two of the ETFs with some of the largest weights to shares of Apple have recently seen modest outflows.

For example, the Technology Select Sector SPDR XLK, the larges technology sector ETF, has lost almost $56 million in assets this month. That is a small slice of XLK's $12.2 billion assets under management, but it could be seen as a commentary on what investors are expecting out of Apple's earnings reports when considering XLK allocates almost 15.8 percent of its weight to Apple. That is about 620 basis points more than XLK's weight to Microsoft, the ETF's second-largest holding. 

The Vanguard Information Technology ETF VGT, which has a 15.5 percent weight to shares of Apple, has lost $2.8 million. VGT, one of the least expensive tech ETFs with an annual expense ratio of 0.12 percent, features Apple as its largest holding to the tune of 640 basis points over Alphabet. 

While there have been modest departures this quarter from XLK and VGT, investors have added $26.5 million to the iShares U.S. Technology ETF IYW. With an Apple weight of almost 18.6 percent, the $2.68 billion IYW has more Apple exposure than any other ETF.

The one Apple that has legitimately shined in terms of fourth-quarter inflows is the PowerShares QQQ QQQ. QQQ, the NASDAQ-100 tracking ETF, has a 12.8 percent weight to Apple, putting the iPad maker ahead of Microsoft by 480 basis points in the ETF. Investors have added $1.17 billion in new asset to QQQ this quarter.

However, it can be debated whether those inflows are in anticipation of Apple's Tuesday earnings report or in reaction to the results delivered by Alphabet, Amazon and Microsoft. Those three stocks combine for almost 22 percent of QQQ's weight.