Tech giant Apple is bringing Arcade, a new video gaming service, a new entry level iPad, a new Watch Series 5, and of course, an iPhone 11. Plus, iPhone 11 Pro and the bigger Pro Max, the new flagship models sporting three cameras and improved computational photography are already wowing consumers around the world. As you wait for these products to arrive in India, and if you think these products would give another big push to Apple’s fortunes, then it may be a good idea to take exposure to US-listed Apple Inc. shares. RupeeIQ scanned mutual fund portfolios of Indian schemes and found Apple Inc. stock in six of them. If you are thinking of spending lakhs of rupees in Apple’s latest products, consider having some exposure to Apple stock too.
Apple of my eye
At $973 billion, Apple Inc. is one of the world’s biggest companies in terms of market value. On Tuesday night Indian time, Apple unveiled new products and services. The standard iPhone 11 is going to cost $699 in U.S. The new Apple iPad prices start at $329. The Apple Watch Series 5 GPS models start at $399 and 4G at $499. Apple Arcade will cost $4.99/month for the whole family after a one-month free trial. Apple TV Plus service will cost $4.99/month for the whole family.
If the new Apple offerings strike a chord with consumers, this may bring good business for the company too, whose shares have dipped 2% in the last 12 months. Plus, the Apple services revenue pie keeps on growing.
The stock trades at 18.4 times price to earnings (P/E). Apple stock is cheaper compared to tech rivals such as Alphabet (Google owner), Facebook and Microsoft.
Some of the Indian mutual funds have exposure to Apple Inc. stock. While some funds have direct exposure to the stock, others have indirect exposure through feeder funds. Here is a list of funds who have direct/indirect exposure to Apple Inc. shares.
Indian mutual funds’ exposure to Apple Inc
|Scheme||Apple exposure as % of net assets *||1-year % return||3-year return %||5-year return %|
|Motilal Oswal NASDAQ 100 ETF||10.42||4.88||20.11||17.39|
|Motilal Oswal Nasdaq 100 FOF||10.28||–||–||–|
|Kotak US Equity Standard Fund||4.16||-0.62||12.45||9.95|
|Aditya Birla Sun Life Digital India Fund||2.39||-1.84||16.83||10.96|
|Franklin India Feeder Franklin US Opportunities Fund||2.39||4.13||17.77||12.76|
|DSP Global Allocation Fund||1.29||1.88||5.82||4.96|
|* As per last declared portfolio including exposure through feeder funds ; Scheme performance upto September 9, 2019 ; More than 1 year return is expressed in CAGR|
Apple shares are up about 37% in 2019 calendar year so far. Though Apple stunned Wall Street and Silicon Valley in January when it warned of slowing sales and earnings growth, investors have been upbeat about Apple’s services business e.g. Apple Music, AppleCare warranty business and Apple Pay. Apple services sales account for 17-18% of total sales, which is more than the iPad, Mac and wearables such as Apple Watch. The iPhone accounts for 56% of sales. Even if Apple’s hardware products don’t catch on, consumers continue to give services money to Apple when they pay for monthly subscriptions linked to current iPhone, iPad, Macbook and watches. On top of that, Apple still has over $100 billion in net cash if it repaid all its debt today. These are the reasons why Apple may be an attractive bet for mutual funds managers.
Disclaimer: Views expressed here in this article are for general information and reading purpose only. They do not constitute any guidelines or recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument.