Bloomberg Breaks Down Apple's Stock Performance And How It Affects ETFs

It's well understood by the investment community that Apple Inc. (NASDAQ: AAPL) is a heavyweight stock given its approximately $500 billion. However, it isn't as clear what affect Apple has in the exchange-traded funds that hold it stock.

Bloomberg's Eric Balchunas breaks down the facts.

"People will sometimes say that ETFs are the tail wagging the dog," he explained. However, "Apple is the tail wagging the ETF."

Related Link: What You Should Know About Carl Icahn Dropping Apple

Balchunas noted Apple's stock is top the holding in five of the six largest ETFs, including SPDR S&P 500 ETF Trust (NYSE: SPY) as they are market cap weighted. He continued that the recent approximate 16 percent decline in Apple's stock over the past two weeks erased approximately $2 billion in value among ETF holders.

"When you look at these ETFs, you sort of live by the big-stock sword and you die by the big-stock sword," he argued.

Meanwhile, companies of smaller cap size that outperform the market, such as Facebook Inc (NASDAQ: FB), can't make up the difference and counter Apple's negative affect on the ETF.

On the other hand, Apple is an outsized contributor to growth in ETFs when its own stock grows. For example, the Technology SPDR (ETF) (NYSE: XLK) has gained 200 percent over the past seven years and Apple's performance was responsible for 40 percent of those gains.