It's amazing just how fast Wall Street can turn on a firm. Once known as the market's stock that could do no wrong, tech company Apple (Nasdaq:AAPL) - and its investors - are finding out the hard way what happens when momentum falls off the cliff. As Apple is reporting less-than-expected earnings and lower sales numbers, institutional investors have begun dumping the company in spades, and shares of the tech giant have plunged from $700 a share all the way down to the $450 mark.

The problem is that more than just direct Apple shareholders have been punished by the firm's 40% drop from the peak it reached last fall. The tech company is one of the largest holdings of many exchange traded funds (ETFs), as well as mutual funds and other investment vehicles.

With uncertainty still plaguing the Cupertino, Calif. firm, investors in a variety of funds could be in for a bumpy ride.

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Twenty-Three Percent
You may not have directly purchased shares, but odds are you own Apple stock somehow.

Like it or not, as a former "world's largest company" crown-wearer, the tech stock is everywhere. According to fund industry researcher Lipper, roughly 23% of all equity funds hold Apple shares. That means the company can be found in not only domestic and tech sector funds, but also global- and international-based funds. Even some of the funds specializing in managed futures or alternatives have exposure to the iPad maker. This works out to be roughly 1,120 different funds as of its most recent portfolio reporting. What's scarier is that slightly more than one in 10 funds have at least 10% of their total assets in Apple stock.

Investors in ETFs are particularly vulnerable. As Apple grew in size and market cap, it continued to climb to the top of many indexes' top holdings. The worst offender for overexposure to Apple could be the popular PowerShares QQQ (Nasdaq:QQQ), which has a shocking 18.2% weighting in Apple. According to Lipper, the Qs - or Cubes, as it is nicknamed - has fallen 5% since Apple's peak.

It's easy to understand how a tech-oriented fund has too much exposure to Apple, but what about value- or dividend-focused funds? Apple is in there too. For example, the new FlexShares Morningstar U.S. Market Factor Tilt Index ETF (ARCA:TILT) - which over-weights value stocks in a total stock market index -counts the tech firm has its largest holding. Have a broad-based global ETF like the SPDRMSCI ACWI IMI (ARCA:ACIM) as a core holding? Apple is the second-largest holding in that fund. Overall, Apple accounts for roughly 4% of total ETF float.

The abject lesson here is that the tech firm finds its way into many investors' portfolios without them even knowing it.

SEE: 3 Ways To Indirectly Invest In Apple

Is It a Problem and What to Do
Given that it's everywhere - this article doesn't even look at Apple exposure in actively managed funds - the question for investors could be, "Is too much Apple a bad thing?" The answer isn't so simple. As it was growing, Apple's rising share price did wonders for investors. Performance for the tech sector in 2012 would have been flat if it wasn't for Apple's returns. Now we are seeing the reverse of those trends. The S&P 500 is up nearly 8% year to date, but its results would be much better if Apple was excluded. So it cuts both ways. Over the long term, it might not matter. At one time - back in the 1980s - IBM (NYSE:IBM) actually accounted for more of the S&P 500 than Apple did at its peak. Its shares rose and fell, yet the index has been resilient over time. So for broad-index ETF investors, the answer might be to do nothing.

For those in the tech world, high concentrations in funds like the iShares Dow Jones U.S. Technology Sector ETF (ARCA:IYW) could continue to prove to be dangerous. For these investors, an equal-weighted tech ETF like the Direxion NASDAQ-100 Equal Weighted ETF (ARCA:QQQE) or Guggenheim S&P 500 Equal Weight Technology ETF (ARCA:RYT) prevent Apple from gaining too much exposure in their indexes and balances out all the tech players.

SEE: A History Of Apple Stock Increases

The Bottom Line
While you may not directly own it, odds are your ETF has some Apple exposure in it. That hasn't been a problem, as shares have risen over the last few years. However, with issues beginning to show themselves, that exposure could be a source of underperformance in the months ahead.

At the time of writing, Aaron Levitt did not own any shares in any company mentioned in this article.

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