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Kent Thune

Apple Falls, Takes a Bite Out of Funds

By January 24, 2013

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Apple stock (AAPL) fell more than 12% Thursday, January 24, 2013. Even if you don't own any shares of stock in Apple, you may still be impacted if you own mutual funds.

Funds Impacted by Apple Stock Drop

Mutual fund investors have enjoyed a nice New Year's bounce and Apple's fall may just receive a passing glance. But do you know how many funds own shares of Apple?

In recent years Apple has grown so large that it is a major component of both the Dow Jones Industrial Average and the S&P 500 indexes. This makes it automatically a holding in S&P 500 Index Funds as well as most large-cap stock Exchange Traded Funds (ETFs). As reported by MarketWatch, Apple shares are held by more than 5000 mutual, index and exchange traded funds worldwide, according to data compiled from Factset.

Among the most popular funds with significant exposure to Apple stock is Fidelity Contrafund (FCNTX) with approximately 11% of its portfolio in Apple shares.  Check the MarketWatch article for a list of mutual funds and ETFs with shares of Apple stock representing more than 15% of each respective fund portfolio.

However there is some consolation for people who hold S&P 5oo Index funds: The S&P 500 was at roughly 0.01% gain on Thursday, when Apple declined 12%. Although Apple has performed quite well long-term, today's lesson is one large feather in the cap of diversification with mutual funds. Also, those who hold FCNTX, the fund only declined 0.33% Thursday.

 

Comments
January 28, 2013 at 8:29 am
(1) Simon says:

12% fall is signicant to a non portfolio investor. It is therefore important that investment advisers let their clients know the importance of mutual fund and portfolio investment.

By the way what caused the decline in Apple Stock prices? and

Could’nt S&P 500 and Dow Jones predict the fall to alert the company?

January 30, 2013 at 8:55 pm
(2) mutualfunds says:

True Simon. However, I would be concerned about an adviser who was not capable of diversifying properly to prevent heavy exposure to just one stock. For example, a portfolio of 25 stocks would not be significantly affected by weakness in just one holding.

Taking your and my points further, an investor using an S&P 500 Index fund would have gains over the past few weeks, whereas a heavy position in Apple would result in a loss. The only happy Apple investors are those who have held shares for several years, where the gains far surpass the average mutual fund.

Thanks for the comment.

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