The share price of Apple, by far the world’s most valuable company, with a market capitalization over $3 trillion, has surged 49% so far this year, increasing its weight in stock indexes to record levels. The company’s weighting in the S&P 500 has swelled to 7.6%, the biggest of any one stock in the history of the benchmark index, according to S&P Dow Jones Indices.
That hefty weighting means moves in Apple’s shares have an outsized influence on index performance.
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.
The issue has taken on additional urgency this year, as the market’s gains are being led primarily by a handful of megacap companies such as Apple, Microsoft and Nvidia, whose shares have outperformed.
“If you’re an active manager, one of the issues is it’s hard to own that much of one name. You are taking on more and more risk,” said Todd Sohn, technical strategist at Strategas. “Because they are such heavy weights within the benchmarks, it becomes really challenging to outperform.”
Apple’s weighting in the S&P 500, for example, is bigger than the entire 37-stock consumer staples sector (.SPLRCS), which was last at a weight of 6.7%.
In the MSCI All-Country index, a widely used benchmark for stocks globally, Apple’s 4.7% weight is greater than that of all United Kingdom stocks combined, which account for 3.6%, according to DataTrek Research.
MacDailyNews Take: Let the fomenting begin! In fact, the fomenting against Apple has already begun (see Financial Times‘ Apple forced to make ‘drastic’ cuts to Vision Pro production forecasts).
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