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Apple’s Success Is Making Things Tricky for Money Managers

Let’s break it down: Apple’s stock is on fire this year, with shares jumping by nearly half their value. This has pushed the company’s total worth over $3 trillion.

Because of this, Apple takes up a lot more space in the S&P 500, which is like a supergroup of America’s 500 largest companies. Right now, Apple is the most giant among these giants, taking up a whopping 7.6% of the S&P 500. That’s the most significant chunk any single company has ever held!
Here’s where it gets tricky. A lot of people managing big piles of money (fund managers) don’t have as much invested in Apple as they probably should, based on how much of the S&P 500 it makes up. They might want to spread their bets around or be nervous about putting too many eggs in one basket. Some might even have rules that stop them from owning too much of one stock.

The problem? If Apple’s stock keeps zooming up, these fund managers could miss out and might not do as well as the S&P 500 or other indexes (which are like a report card for how well stocks are doing). This is extra important right now because only a few big companies, like Apple, Microsoft, and Nvidia, are leading the way in market gains.

Todd Sohn, a strategist at Strategas, says that it’s tough for these fund managers to own so much of just one company because it’s risky. Yet, because Apple is such a massive part of the benchmarks (like the targets they’re trying to hit), it’s hard for them to do better than the benchmarks if they don’t own enough of it.

A survey by Morningstar found that of 418 big U.S. funds, only 26 had more money in Apple than what Apple makes up in the S&P 500. So, many fund managers are in a bit of a pickle with this Apple situation!

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