I’m not particularly an Apple guy. Although I have an iPod I love dearly, I carry a Samsung Galaxy phone and write on a Dell laptop. (You can read into that whatever you like).
I do know lots of people who love Apple products, and most of them are not annoying about it. But Wall Street loves Apple, and that love probably is a part of your portfolio. How much? Quite a bit, most likely, but not quite enough to worry about — yet.
It’s not hard to understand the love for Apple. The stock has turned $10,000 into $31,922 the past five years, and seems to show no sign of slowing down in the wake of the death of its former CEO, Steve Jobs.
Not surprisingly, Apple is a core holding for some funds. For example, if you own the iShares Nasdaq 100 ETF (QQQ), you’ve got a 14.4% stake in Apple. Due to some rejiggering of the index, that’s actually down from its 19% position in the index in 2010. Nevertheless, if you own the fund, you’re staking a fair amount on Apple.
Fidelity Select Wireless has the biggest stake in Apple: It takes up 24% of the fund’s portfolio. The diversified stock fund with the biggest bite of Apple is the tiny $8 million Upright Growth fund (UPUPX), with 21.3% in the stock. (It also has 11.3% in cash). Vanguard Growth Index fund has a 9.9% stake in Apple.
By and large, however, most of the largest funds don’t seem to be exceptionally heavy in Apple, in part because Apple has yet to reach the kind of epic love from Wall Street that starts sending up warning signals. “Apple makes up 3.57% of the S&P 500, a ranking that does not even put it in the top-20 year-end historical rankings (International Business Machines was 6.37% in 1985),” writes Howard Silverblatt, the god of indexing at Standard and Poor’s. “On a global basis, Apple is 1.54% of the S&P Global Broad Market Index, with Microsoft second (at 0.83%), and then Exxon Mobil (with 0.73%).”
Thus, Fidelity Contrafund is overweight the stock, owning nearly $4.5 billion of the stock — but it accounts for just 4% of the fund’s portfolio. The American Funds Growth Fund of America has a very modest 0.5% position in Apple.
It’s never a good sign for one stock to have too much effect on funds and indexes. While Apple isn’t there yet, Silverblatt warns that it’s getting close. “The combination of Apple’s size and price moves, results in an enormous impact on indices, with the only comparison being International Business Machines’ impact in the early 1980s, when PCs were new, and IBM was expected to own the market,” Silverblatt says.