The sharp decline in shares of Boeing was felt across the stock market Monday, dragging the Dow Jones Industrial Average down more than 200 points at the lows of the session. The stock shed more than 13 percent after the aircraft manufacturer saw its second 737 MAX 8 plane crash in less than five months on Sunday.
Boeing is not only one of the biggest point drivers for the Dow, but its impact can also be felt in 215 U.S.-listed exchange-traded funds. The three ETFs with the most exposure to Boeing are the iShares U.S. Aerospace & Defense ETF, with 13 percent exposure; the SPDR Dow Jones Industrial Average ETF, with 11 percent exposure; and the Industrial Select Sector SPDR Fund, with 10 percent exposure.
Experts said there are a few paths that investors with exposure to Boeing should consider.
“Weigh in the news. Do your homework,” Chris Hempstead, head of ETF trading at Deutsche Bank, tells CNBC’s “ETF Edge.” “If you’re a retail investor, read as much as you can. Get a sense of where you want to be with this kind of news. Decide how far the market is taking these stocks down as a result of the news, and if that’s something you disagree with, you want to go in.”
Investors who are bullish on the company’s prospects should start positions in the ETFs with the most exposure to Boeing, Hempstead said Monday, but they should also remember just how much scale that stock has.
“Keep in mind: a name like Boeing is in more than just those aerospace and defense ETFs. There is massive exposure to Boeing in the S&P 500 ETFs from iShares, Vanguard and State Street,” Hempstead said. “So it’s going to move the markets one way or another, but depending on where you value Boeing, it should direct you to which ETFs you choose.”
John Davi, founder, CEO and CIO of Astoria Portfolio Advisors, called Boeing’s widespread influence on the industrial sector and the stock market as a whole “a double-edged sword.”
“Obviously, when you have good news, it benefits you, and bad news, it’ll hurt you. So, if you’re uncomfortable with that risk-reward, then maybe you need to look at something that’s a little bit more equal-weighted,” he told “ETF Edge.”
Boeing shares have gained some 300 percent in the last five years, double the advance of the S&P 500.