NEW YORK, USA – The massive rally in Apple’s shares is forcing some fund managers to revisit a thorny dilemma: they may not own enough of the stock.
If shares of Apple keep rallying, that could hurt the results of active fund managers, who strive to beat indexes such as the S&P 500 or Russell 1000. “Because they are such heavy weights within the benchmarks, it becomes really challenging to outperform.”Of 418 US broad market funds tracked by Morningstar, only 26 held a greater weight in Apple than the stock’s weight in the S&P 500, according to their most recent regulatory filings.
Greenwood Capital, which has $1.4 billion in assets under management, counts Apple as one of its top five holdings, said chief investment officer Walter Todd. But risk management rules at the South Carolina firm prohibit putting more than 5% into any one stock; that means the firm is underweight Apple compared to the S&P 500, to which Greenwood funds benchmark their performance.
Apple’s weighting in the S&P 500, for example, is bigger than the entire 37-stock consumer staples sector, which was last at a weight of 6.7%.
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