By Sarah Morgan
Mutual fund shareholders who read of Steve Jobs’ resignation with merely academic interest might want to take a closer look at their portfolios. Apple (AAPL) shares fell immediately on the news – which, in turn, will have a ripple effect on the thousands of mutual funds that hold the stock, as the Wall Street Journal pointed out in January when Jobs went on indefinite leave:
“Few stocks are as widely held in regular mutual funds as well as in hedge funds. Few affect the performance of so many retirement portfolios. This is especially unusual because Apple is such a volatile growth stock. In recent years it’s fallen by two-thirds and it’s quadrupled. Most of the other shares that crop up in every portfolio are dull ones like Exxon Mobil (XOM) or Procter & Gamble (PG) or Johnson & Johnson (JNJ).”
So mutual fund shareholders might be surprised to know how much Apple stock they (indirectly) own. According to an analysis by Standard & Poor’s research team, 26% of all domestic and global stock fund share classes have Apple as one of their top 10 holdings. As of funds’ most recent filings, that includes:
- Fidelity Contrafund (FCNTX), which had 6.8% of its $78.1 billion invested in Apple;
- T. Rowe Price Growth Stock fund (PRGFX), 7.2% of $26.7 billion;
- Putnam Voyager (PVOYX), 7.3% of $78.1 billion;
- Morgan Stanley Focus Growth fund (AMOAX), 9.99% of $1.8 billion.
Index funds hold Apple too, from broad market indexes (Apple is the second-biggest U.S. company by market valuation) to tech sector trackers. Funds that track the Standard & Poor’s 500-stock index, like the $105 billion Vanguard 500 Index Investor fund (VFINX), have only 2%-3% of assets allocated to Apple – not enough to feel a real shock even if shares fall much more sharply than they have so far. But funds tied to the more tech-heavy Nasdaq have more at stake: The $20.7 billion PowerShares QQQ ETF (QQQ), which tracks the Nasdaq-100 index, recently had 12.11% of assets in the stock.
As the WSJ put it in January: “If your U.S. stock portfolio is up over the past few years, and especially last year, Apple’s remarkable performance probably has something to do with it.”
A tool like Morningstar’s Instant X-Ray can tell you how much Apple you hold via your funds. If it’s a more substantial fraction than you’re comfortable with, it may mean you’re not as well-diversified as you thought, but that’s a different issue. Holding Apple shares themselves isn’t necessarily reason for panic. So far, stock analysts and fund managers are saying the investment case for the company remains strong. The managers of the Henderson Global Technology fund (HFGAX), which has about 7.5% of its $334.7 million portfolio invested in Apple, expressed that view in a statement this morning. “There’s no doubt the influence of Jobs has been hugely important in making Apple the company it is today,” said managers Stuart O’Gorman and Ian Warmerdam, but “we believe Apple will continue its onward march.”