More Apple is Likely Coming Into Your ETF Portfolio

On this Friday December 15 the recompositions of both the S+P 500 and the Nasdaq 100 will be announced


MSCI will do its index recomposition early in 2018.

Given the 17%+ gain in AAPL since the last S+P recomposition in June and its large weighting in the major indices that weighting is likely to increase after the recompositions. Meaning holders of ETF portfolios will like find more AAPL in their portfolio.

AAPL his the largest holding at just under 4% in the largest ETF SPY which has over $250 billion in assets under management

 AAPL 17% weighting in the Nasadaq 100 and it QQQ has just under $60 billion in assets under management.

Iinterestingly for "smart beta" investors AAPL is the top holding in QUAL, the third largest holding in MTUM (these are based on MSCI indices)

It is also the larges holding in the S+P 500 large cap growth ETF IVW

The net result is that the % of your ETF portfolio  invested in AAPL is likely to go up. Whether or not that is a good thing is up to the individual investor. But it does show that it there is merit in looking "under the hood" of an ETF portfolio.


I am not a stock picker but I will point out thast AAPL has over $250 billion (!) in cash much of it abroad. Given the tax incentives for bringin in cash for abroad it is likely that a portion of that will be brought back to the US. And given that AAPL does next to no manufacturing in the US it is next to impossible it will shift production (which it outsources to Chinese manufacturers) back to the US.

That means the cash will likely go to dividends, stock buybacks and acquisitions (netflix has a market cap of around $80 bln...just sayin).. Yesterday Apple announced its acquisition of music identification service shazam for $80 million obviously a tiny dent in its cash.