When Apple shares go together, the unique market weight creates headaches for stock managers because they basically never own enough of it. That dynamic played out strongly once again in the third quarter.
Lu Wang for Bloomberg:
Only 27% of large corporate funds beat their benchmarks during the period, the worst third-quarter result since Bank of America Corp. began tracking the data in 1991. While other factors contributed to the poor performance, the strategists highlighted, including the Savita Subramanian. underexposure for Apple as a key perpetrator.
Whether by election or regulatory strikes, not many active funds are positioned to maximize Apple’s gains. Among some 200 equity funds that are benchmarked for the S&P 500 and have at least $ 500 million in assets, four-fifths had fewer Apple shares than the company’s 6.6% representation in the benchmark, data compiled by Bloomberg performance. These funds returned 7.1% in the last three months, following the market by 1.3 percentage points.
Interestingly, when Apple’s hegemony eases, fund managers do better. When equities turned around and fell 10% last month, the proportion of fund managers that beat the benchmark index increased to 60%, BofA data shows. As the economy recovers, market participation is likely to expand, and it will be good for stock pickers, according to Subramanian.
MacDailyNews Take: Apple is also the only stock that matters to many individual investors.