With Apple’s (NASDAQ:AAPL) stock continuing its uncertain and rocky journey to the end of the year, it’s not just individual shareholders who are facing the pinch. Investors who put their faith in Apple-focused mutual funds when the company’s share price was on an upswing earlier in the year are also in some trouble. And the recent drop has shown that portfolio concentration is not always a good idea for these funds, Reuters said.
What is the Cause for Investors’ Concern?
Apple is up about 26 percent this year, making it an attractive holding for shareholders and mutual funds alike. However, the fact that it has fallen nearly 37 percent since reaching a record high in mid-September has now been the cause of some major pain. According to Morningstar, about $4.5 billion has been added to funds with overweight stakes in Apple this year, but the majority of the cash came in after the company’s share price first crossed $600 in March. The latest share drop, then, has also been significantly impactful.
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The $302 million Matthew 25 fund holds 17.4 percent of its assets in Apple, according to Reuters data, and it has gained about 32 percent since the beginning of the year. However, most of its investments in the iPhone maker came after March, which meant that the latest fall proved to be a big drag. The value of Matthew 25’s stake in Apple has dropped 19 percent since early April and 27.2 percent since the beginning of September.