Apple stock’s sharp drop shakes up fund world

If you think Apple’s tumble hasn’t affected you, you might want to double-check your portfolio.

The Standard and Poor’s 500 has gained about 0.9 percent since Apple stock’s record close of $702.10 on Sept. 19. On Thursday, the computer maker’s stock had fallen $199.42, or 28.4 percent, since then, despite its 4.2 percent gain Wednesday. But if your fund manager loaded up on Apple, you could be hurting now.

The poster child for overripe Apple exposure is the Nasdaq 100 index, which has an astonishing 18.2 percent weighting in Apple. The popular Powershares QQQ exchange traded fund, which has $32.6 billion in assets, has fallen 5 percent since Apple’s peak, according to Lipper, which tracks the funds.

The only thing worse than owning an index fund with 18.2 percent in Apple is owning a leveraged index fund with 18.2 percent in Apple. Leverage means amplifying gains and losses with futures and options. Case in point: ProShares UltraPro QQQ, which has plunged 15.3 percent since Sept. 19, thanks largely to its amped-up Apple holdings.

While some funds can claim they’re merely following an index, no matter how flawed, others stocked up on Apple deliberately. Berkshire Focus, for example, has Apple as a core holding – 17.6 percent of its assets, according to Morningstar. The fund has fallen 9.9 percent since Apple’s September peak through Tuesday. Turner All-Cap Growth fund, which has about 11 percent of its assets in Apple, has dropped 7.3 percent in the same period.

Mutual funds aren’t the only big holders of Apple stock. As of June – the latest data available – Calpers, the California state retirement fund, had 2.7 million shares of Apple, then worth $1.6 billion.

Owning a great deal of Apple won’t necessarily poison a fund’s performance. Calpers, for example, has enormous bond holdings.

And even funds that are primarily stock funds can have a big stake in Apple without too much harm. Fidelity Contrafund, for example, is the single largest holder of Apple stock. The fund had 11.9 million shares of Apple as of the end of November, according to Morningstar, the Chicago fund trackers. Apple was Contrafund’s top holding, and accounted for 8.3 percent of the fund’s holdings.

Yet Contrafund has pared just 0.1 percent since Apple’s top. One possible reason harm was minimized: Contrafund may have sold some of its shares since its last official portfolio update in November. Fidelity doesn’t comment on individual stock holdings. Another reason for muted pain: The fund had other stocks that fared well since Sept. 19, including Berkshire Hathaway, up 7.4 percent, and eBay, up 4.2 percent.

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