ETFs to Trade the Apple Tablet Rumors
01/27/2010 12:01 am EST
This week’s expected launch and release of Apple’s (AAPL) tablet device is expected to do to media what iTunes did to music and the iPhone did to telecommunications.
Apple CEO Steve Jobs expects the tablet to bring great leaps of innovation to the media industry by repackaging and reselling media content. In fact, the new device aims to bring media efficiency to homes by enabling multiple users to read news, watch television, and read e-mails.
According to the Wall Street Journal, Apple has been in negotiations with television networks like Walt Disney (DIS) and CBS Corp. (CBS) to come up with a monthly TV subscription service. Additionally, the company has been in talks with the New York Times (NYT) and NewsCorp (NWSA) to ink a publishing deal regarding books, newspapers, and magazines.
On the positive side, Apple is no stranger to devising new ways to access and pay for quality content. Recently, Apple’s iTunes became the largest retail music provider as quarterly revenues derived from the iTunes Store has more than quadrupled in the past four years. Additionally, Apple’s latest earnings report beat Wall Street’s expectations, showing record revenues and a huge uptick in iPhone sales. With this in mind, it is likely that the tablet will revolutionize and reshape the media industry and further bolster revenue at the innovative company.
Apple will likely face some of the same obstacles and hurdles that it did with the music industry and will have to demonstrate a consumer need for the tablet. Additionally, some technology experts suggest that a lack of eBooks, which is found on Amazon’s (AMZN) Kindle, could potentially deter a significant number of users. At the end of the day, and with the right price point, Apple will likely overcome these obstacles and users will be driven to the tablet’s ability to increase efficiency.
For ETF investors, Apple can be accessed through the following funds:
- The iShares Dow Jones US Technology ETF (IYW), which allocates 9.43% of its assets to Apple
- The Technology Select Sector SPDR ETF (XLK), which allocates 8.3% of its assets to Apple
- The iShares S&P North American Technology ETF (IGM), which allocates 7.54% of its assets to Apple
When investing in these ETFs, it is important to keep in mind the inherent risks that are involved. To help mitigate these risks, the use of an of an exit strategy that triggers price points which represent abnormal price weaknesses and an increased likelihood that further price weaknesses in these ETFs are likely to follow, is of importance.
By Kevin Grewal, editor at The ETF Institute and Smartstops.net