Funds with the Largest GM Stake
The top mutual fund holders of GM’s stock are all index mutual funds and index ETFs. The Dow DIAMONDS (NYSEArca: DIA) carries almost 7 million shares, the Vanguard 500 Index Fund (Nasdaq: VFINX) has 5.8 million shares and the SPDRs S&P 500 ETF (NYSEArca: SPY) owns 5.26 million shares. Because GM is a component of key stock benchmarks like the Standard & Poor’s 500 and Dow Jones Industrial Average, index funds following these benchmarks have been forced to own the stock. What type of performance has that meant for investors?
Even with the dead weight of GM, the S&P 500 index still outperformed almost 72% of actively managed mutual funds over the past 5 years. Some fund managers may proudly declare they avoided GM, but their collective performance still hasn’t produced profitable results for the typical mutual fund investor. According to fund researcher Dalbar, stock fund investors lost 41.6% last year compared to a 37.7% decline for the S&P 500 Index. Today, roughly 85% of the $9.6 trillion invested in mutual funds is invested in active funds attempting to beat the market. “The belief that bear markets favor active management is a myth,” states a recent S&P report of active managers versus indexes.