BOSTON ( TheStreet) -- The death of Apple (AAPL) co-founder and former Chief Executive Officer Steve Jobs on Wednesday may have jostled many investors into checking on how many Apple shares they actually own.
Some will be surprised about how many they hold, given the tech firm's ubiquity as a top holding in mutual funds, pension funds and index funds. That recognition should prompt them to reassess their own portfolio's diversity, since a concentration in one stock, or one industry, may add to volatility and reduce returns.
That's not to say Apple investors haven't been richly rewarded by their loyalty to the revolutionary maker of iPods, iPads and iPhones. The company's shares have a 10-year average annual return of a staggering 47% versus the S&P 500's 2.6% return. This year, Apple's shares are up 17% compared with the S&P 500's 7.6% decline.
Tom Roseen, head of research services for fund-research firm Lipper, said "a lot of people may have become complacent in keeping up with their annual reports" from fund providers and investment advisers. They may not have realized portfolio weightings shifted over the years. Hence, a reshuffling may be in order.Apple, now selling for almost $380 a share, bringing the total market value to a dizzying $350 billion, is second only to Exxon Mobil (XOM) in the S&P 500 Index, making it a top-10 holding in most passively managed index funds and actively managed large-cap mutual funds. A total of 26% of U.S. and global equity mutual funds have Apple in their top 10 holdings, according to Standard & Poor's mutual fund industry analyst Todd Rosenbulth. Peruse any fund report and you're likely to see "AAPL" as a holding. It's the one no-brainer stock for mutual fund managers to own. The company's ubiquity is due, in part, to the goals of the fund and investors' timing. For example, at some point Apple was viewed as a growth stock, so that category of fund loaded up on it. When its shares fell, it may have been viewed as a value stock, and so got picked up by value fund managers. And its large-cap size makes it a part of any so-called core mutual fund or index fund. But few managers ever sold Apple once it entered their portfolios and juiced returns like no other.
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