You Own More Apple Stock Than You Think

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.

According to fund tracker Morningstar, Apple is owned by 4,436 mutual funds, including 2,030 large-blend funds, 1,852 large-growth funds, and seven other fund categories, including, surprisingly, a small-value fund and two small-growth funds, despite its massive market capitalization. Small-cap companies usually have market values of no higher than $2 billion or so.

At any rate, Standard & Poor's analysts have a "strong buy" rating on Apple's stock, Rosenbluth said, and that's not likely to change given the company's strong growth potential, he said.

As for Apple's widespread fund holdings, he said, that's not likely to change either, as Jobs had passed the management baton to new manager Tim Cook, and his succession and its impact at the company had already been factored in to most analysts' and fund managers' outlook for the company. Jobs died Wednesday at age 56 from complications stemming from pancreatic cancer. He had taken several leaves of absence and, therefore, his passing didn't shock investors.

As of June 30, Fidelity Investments was the largest investor in Apple, with a 5.2% stake of its outstanding shares, led by its $68 billion Contrafund ( FCNTX). The Vanguard Group of funds, known for its index funds, is the second-biggest investor, holding 3.8% of Apple's shares.

The second-largest individual mutual-fund holding in Apple is that of the $137 billion American Funds Growth Fund of America ( AGTHX), at 1.25% of Apple's shares.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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