Founded in 1994 as an online bookstore, Amazon.com Inc. (NASDAQ: AMZN) has become the largest Internet-based retailer in the world. The company has also branched out into cloud computing, electronics, and content distribution, and it has begun testing drone delivery in certain areas.
Amazon's stock has become notable for its extreme overvaluation according to traditional valuation metrics. One of the main reasons for Amazon's lack of profitability is its continued dedication to expansion by reinvesting much of its earnings and cash flow back into the business. This high-growth strategy has made its stock popular among both individuals and mutual funds that employ a higher-risk investing approach.
Here are the top five mutual fund holders of Amazon who collectively own around 7% of the company, as of March 4, 2020.
- Amazon has grown to become a global online retail giant, with a market cap nearly $1 trillion.
- Among its largest shareholders are mutual funds, allowing investors in those funds to have a slice of Amazon's performance.
- Here, we look at the top 5 mutual fund holdings of AMZN stock.
1. The Vanguard Total Stock Market Index Fund (VTSMX)
The Vanguard Total Stock Market Index Fund (VTSMX) is one of the largest mutual funds and provides broad stock market exposure. The fund passively manages $756.6 billion in total assets. As of March 2020, VTSMX owns 11.93 million Amazon shares, which accounts for 2.64% of the funds' total assets and 2.41% of Amazon's total shares held. The fund has an expense ratio of 0.14% and a minimum investment of $3,000.
2. The Vanguard 500 Index INV (VFINX)
Offering exposure to some of the largest U.S. companies, the Vanguard 500 Index (VFINX) is the second-largest mutual fund holder in Amazon, with over 17.68 million shares to its name, or 1.7% of the company, as of October 2018. VFINX's assets total half-a-trillion dollars, with 3.1% of those assets invested in the Amazon stock. The fund has an expense ratio of 0.14% and requires a minimum investment of $3,000.
3. The SPDR S&P 500 ETF (SPY)
The SPDR S&P 500 ETF (SPY) is the first ever ETF introduced in the U.S. public market and remains one of the most popular to this day, tracking the S&P 500 index. As of March 2020, SPY is the third largest Amazon holder with 4.78 million shares, or nearly 1% of the company. SPY's investment in Amazon represents 3.19% of the fund's $264 billion portfolio. SPY has an expense ratio of 0.095%.
4. The Fidelity Contrafund (FCNTX)
The Fidelity Contrafund (FCNTX) is the fourth-largest Amazon major fund shareholder, with 4.25 million shares, or 0.86% of the company, as of March 2020. The fund holds total assets exceeding $112.3 billion and it seeks to invest when a stock's price doesn't fully reflect its company's intrinsic value. As such, it focuses on large-cap stocks that the fund's managers feel are unloved or underappreciated by Wall Street. The fund has 7% of its total assets invested in Amazon. FCNTX has an expense ratio of 0.82% and no minimum investment.
5. The American Funds Growth Fund of America (AGTHX)
The American Funds Growth Fund of America (AGTHX) invests at least 65% of its $190 billion portfolio in common stocks and provides growth through broad market exposure. As of March 2020, the mutual fund owns 4.21 million shares of Amazon. The fund's investment in Amazon accounts for 0.85% of the company and 3.86% of the fund's total assets. AGTHX has an expense ratio of 0.65% and a minimum investment of $250.