Comments on: Do You Know What’s In Your Mutual Funds? http://www.blueleaf.com/blog/know-whats-in-your-mutual-funds/ Simple Client Reporting and Portfolio Monitoring for Financial Advisors Thu, 26 Jan 2012 11:19:00 +0000 hourly 1 By: John Prendergast http://www.blueleaf.com/blog/know-whats-in-your-mutual-funds/comment-page-1/#comment-324 John Prendergast Thu, 24 Nov 2011 12:45:00 +0000 http://www.blueleaf.com/?p=261#comment-324 Jack, Your assertion is correct. It is possible for a fund to own more than 5% stake in company and it isn't technically prohibited. It requires SEC filings to do it actively or it can happen passively as in the case in this example. Thanks for the request that I clarify. There are several issues going on here. 1) Simplification - to keep the article short I omitted several details. a) Mutual Funds can make special filings with the SEC to continue purchasing shares above 5% if their charters allow. This rarely happens in practice however. b) there is no divestiture requirement if ownership above 5% happens as the result of appreciation. However, some mutual fund charters may explicitly deal with this situation. 2) Appreciation - AAPL has increased four fold since 2009 when it was trading around $100 per share. It's now at $366. It was $257 at the time of this article. I hope that makes sense. Jack,

Your assertion is correct. It is possible for a fund to own more than 5% stake in company and it isn’t technically prohibited. It requires SEC filings to do it actively or it can happen passively as in the case in this example.

Thanks for the request that I clarify. There are several issues going on here.

1) Simplification – to keep the article short I omitted several details. a) Mutual Funds can make special filings with the SEC to continue purchasing shares above 5% if their charters allow. This rarely happens in practice however. b) there is no divestiture requirement if ownership above 5% happens as the result of appreciation. However, some mutual fund charters may explicitly deal with this situation.

2) Appreciation – AAPL has increased four fold since 2009 when it was trading around $100 per share. It’s now at $366. It was $257 at the time of this article.

I hope that makes sense.

]]> By: Jack Johnson http://www.blueleaf.com/blog/know-whats-in-your-mutual-funds/comment-page-1/#comment-323 Jack Johnson Wed, 23 Nov 2011 20:52:00 +0000 http://www.blueleaf.com/?p=261#comment-323 You state "So, for example, your mutual fund is prohibited from owning more than 5% of the outstanding shares of, say, Lululemon. That means in the worst-case scenario, you won’t have more the 5% of your money in any one company." You then include a link to FMAGX which clearly shows the greatest concentration in AAPL making up 6.45%. Can you explain how 6.45% of this funds assets are concentrated in that one security yet your article states that worst-case-scenario is no greater than 5% concentration in any security. You do state ownership of more than 5% requires filing with SEC. That being the case, owning greater than 5% isn't necessarily "prohibited" and owning on 5% is not the "worst-case-scenario".... You state “So, for example, your mutual fund is prohibited from owning more than 5% of the outstanding shares of, say, Lululemon. That means in the worst-case scenario, you won’t have more the 5% of your money in any one company.” You then include a link to FMAGX which clearly shows the greatest concentration in AAPL making up 6.45%. Can you explain how 6.45% of this funds assets are concentrated in that one security yet your article states that worst-case-scenario is no greater than 5% concentration in any security. You do state ownership of more than 5% requires filing with SEC. That being the case, owning greater than 5% isn’t necessarily “prohibited” and owning on 5% is not the “worst-case-scenario”….

]]> By: How Much Apple Stock you REALLY own? | The Scalable Advisor http://www.blueleaf.com/blog/know-whats-in-your-mutual-funds/comment-page-1/#comment-299 How Much Apple Stock you REALLY own? | The Scalable Advisor Mon, 31 Oct 2011 22:19:42 +0000 http://www.blueleaf.com/?p=261#comment-299 [...] John mentioned in an earlier post, one way — and perhaps the best way unless you want to pay for the data — is to look up [...] [...] John mentioned in an earlier post, one way — and perhaps the best way unless you want to pay for the data — is to look up [...]

]]> By: How Much Apple Stock you REALLY own? | Blueleaf http://www.blueleaf.com/blog/know-whats-in-your-mutual-funds/comment-page-1/#comment-225 How Much Apple Stock you REALLY own? | Blueleaf Wed, 08 Jun 2011 18:39:32 +0000 http://www.blueleaf.com/?p=261#comment-225 [...] John mentioned in an earlier post, one way — and perhaps the best way unless you want to pay for the data — is to look up [...] [...] John mentioned in an earlier post, one way — and perhaps the best way unless you want to pay for the data — is to look up [...]

]]> By: How to Write 7 Types of Catchy Headlines http://www.blueleaf.com/blog/know-whats-in-your-mutual-funds/comment-page-1/#comment-26 How to Write 7 Types of Catchy Headlines Fri, 06 Aug 2010 17:11:44 +0000 http://www.blueleaf.com/?p=261#comment-26 [...] you that what you don’t know will hurt you.Do you Pass the Leadership Test?15% Changes EverythingDo You Know What’s in Your Mutual Funds?6. The Campaigner – These headlines provoke people who have similar problems or issues to click on [...] [...] you that what you don’t know will hurt you.Do you Pass the Leadership Test?15% Changes EverythingDo You Know What’s in Your Mutual Funds?6. The Campaigner – These headlines provoke people who have similar problems or issues to click on [...]

]]> By: Own No Evil | Blueleaf http://www.blueleaf.com/blog/know-whats-in-your-mutual-funds/comment-page-1/#comment-9 Own No Evil | Blueleaf Mon, 07 Jun 2010 15:33:02 +0000 http://www.blueleaf.com/?p=261#comment-9 [...] ongoing BP disaster in the Gulf of Mexico highlights another argument for understanding what’s in your mutual funds. I don’t hold, or flaunt, many strong political views, but environmental causes are dear to my [...] [...] ongoing BP disaster in the Gulf of Mexico highlights another argument for understanding what’s in your mutual funds. I don’t hold, or flaunt, many strong political views, but environmental causes are dear to my [...]

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