Tag: matt thalman

Apple + Dow Jones = Better Apple Exposure (Part 2)

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


In part one, I explained how the S&P 500 index (^GSPC) and most index tracking ETF's are weighted. The weighting is based on a company's market capitalization, which means that since Apple Inc. (AAPL) is easily the largest company in the world, it carries the largest amount of weight within these investment vehicles. Furthermore in the past I explained how this amount of exposure to Apple may not be a good thing.

But, with Apple recently being added to the Dow Jones Industrial Average (^DJI) investors now have an index to park money and not feel over exposed to Apple due to its size. While the S&P 500 weights companies by its market cap, the Dow weights companies by its share price. Over the years, a number of analysts and market experts have said this is one of the Dow's major flaws and to an extent I would have to agree. But, because Apple is so much larger than all of the other companies within the market, I am very much in favor of this share price weighting format. Continue reading "Apple + Dow Jones = Better Apple Exposure (Part 2)" →

Apple + Dow Jones = Better Apple Exposure (Part 1)

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


On February 20, I wrote an article discussing how a number of ETFs were massively overweight Apple Inc. (AAPL), leaving investors with too much exposure to the world's largest company. While I believe Apple is a wonderful company to own, as I am a shareholder, unknowingly investors could very easily be overly exposed to just one company. If you are buying an ETF, mutual fund or index fund it is likely because that one purchase diversifies your investment. But because these funds are so overweight Apple, you may not be as diversified as you may think. Luckily though, the announcement that Apple will join the Dow Jones Industrial Average is sign that investors will have the ability to still buy index funds and not have to worry about being overly exposed to Apple.

Before we get into why Apple joining the Dow is a good thing, let's discuss why Apple is so overweight in different funds available.

The wide majority of mutual funds, ETFs, or simply investors in general, measure their yearly performance by comparing it to the performance of the S&P 500, I have even recommended this. For mutual fund or ETF managers the issue arises from this because they need to have their portfolios perform similar to the S&P 500, or clients will begin defecting from their fund to find greener pastures, in most cases a fund manager who has outperformed or at the very least matched the S&P 500 performance. Continue reading "Apple + Dow Jones = Better Apple Exposure (Part 1)" →

Will there be a Marijuana ETF in 2015?

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


As more and more states either allow medical marijuana to be sold or outright legalize the drug, investors interests in the business of marijuana have grown. Countless outfits have popped up on the public markets, mainly on the OTC or over the counter exchange, touting the idea that they will be the next big marijuana conglomerate which will dominate sales of the drug throughout the US.

This 'possible' market opportunity for marijuana based companies in the US could be rather large, if all 52 states opened their doors to the drug by making it legal. (Just thinking about this idea makes dollar signs pop into my head.) But as of now, the business is still small, with only a few states completely legalizing the drug and just a few others allowing it to be used for medical reasons. Continue reading "Will there be a Marijuana ETF in 2015?" →

How Exposed are You to Apple?

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


Apple Inc. (AAPL) now has a market capitalization of more than $750 billion. That makes Apple easily the largest company, not only today, but of all-time. The next largest publicly traded company is Exxon Mobil Corporation (XOM) which has a market cap of $377 billion. That makes Apple just a mere $4 billion shy of being twice the size of the next largest company in the world.

With Apple's history of stock price appreciation and overall market crushing returns, and no real signs of slowing down when it comes to its business, it is understandable that a large number of money managers own shares of the company in theirs funds. But, what is interesting is the size that Apple represents in a large number of ETF's available to investors.

It is understandable that Apple is the largest holding in sum funds. For example Apple represents 3.89% and 3.87% in the SPDR S&P 500 ETF (SPY) and the Vanguard S&P 500 ETF (VOO) respectively, which are designed to mirror the make-up and performance of the S&P 500 index. Therefore since Apple is twice the size of the next largest company, it explains why it is double to size of Exxon in those ETF's. Continue reading "How Exposed are You to Apple?" →

Precious Metal ETF's Seeing Interesting Action

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


Since the start of January the price of Gold and Silver have risen nicely as both metals are seen as a hedge against inflation and purchasing power over time. With continued low interest rates in the U.S., the announcement of QE in the Eurozone, debt issues in Greece, and the Swiss playing games with their own currency, many investors have begun looking for safe havens.

With Gold and Silver being the most trusted safe havens by many, and gold and silver ETF's making it easy for investors to quickly get in and out of owning the metals, we are seeing some interesting actions in two ETF's that actually own bullion itself. The SPDR Gold Shares (GLD) ETF owns actual gold bullion while the iShares Silver Trust (SLV) ETF owns actual silver bullion. The fact that these ETF's own actual bullion is key because their underlying assets are based on the price the metals are trading for at any given time, not futures contracts, miners or any other way to play the metals.

As it would be expected, with what is happening around the world, these ETF's have risen substantially year-to-date; iShares Silver Trust is up 9.83% while SPDR Gold Shares has climbed 8.69%. These move come while the S&P 500 has actually lost 3.1% year-to-date.

But here is what is interesting about these moves; net flows, or the amount of cash moving in or out of these funds are wildly different. iShares Silver Trust ETF has seen $175 million flow out of the fund since January 1 while the SPDR Gold ETF has seen $1.93 billion flow into the fund, according to etf.com data. So why is this happening? Continue reading "Precious Metal ETF's Seeing Interesting Action" →