Time Will Tell Whether Apple Watch Sends Mutual Funds On Buying Spree

If Apple Inc. (NASDAQ: AAPL) investors were hoping that the announcement of the firm's new wearable timepiece would send the stock sharply higher, they were disappointed.

Following Apple's Monday extravaganza where CEO Tim Cook revealed the Apple Watch, the stock ended the session at $127.14, with a gain of $0.54, or 0.43 percent.

It gave back some gains from earlier in the session. Trading volume was 54 percent higher than average, not necessarily a good sign when a stock rallies and reverses lower.

Lackluster Response

Not surprisingly in this age of snark and negativity and cynicism, the announcement was also followed by a boatload of articles with the general theme of "Why you shouldn't buy Apple watch."

Fortunately, the snark won't affect share price, either way.

Why Snark Doesn't Matter All That Much

Institutional owners, such as mutual funds, hedge funds, banks and insurance companies are behind share price movement. Monday's action in Apple suggests that institutional money managers greeted the news with a collective, "Meh."

However, that doesn't suggest that they would abandon any ongoing Apple-buying plans. The large institutions don't amass a position in a stock all at once. Instead, managers often add to positions over weeks, months and even years. If the watch – or any other product – ends up boosting the bottom line, fund managers will take note.

Related Link: Apple Watch: 50 Shades Of "Meh"

A Closer Look At Mutual Funds

Many of the mutual funds with the largest positions in Apple are funds that track the Standard & Poor's 500 or other popular indices. They include the Vanguard Total Stock Market Index Fund Investor Shares (MUTF: VTSMX), the Vanguard 500 Index Fund Investor Class (MUTF: VFINX), the Schwab(R) S&P 500 Index Fund (MUTF: SWPPX) and the Fidelity Spartan(R) 500 Index Fund Investor Class (MUTF: FUSEX).

Apple's pending addition to the Dow Jones Industrial Average won't directly affect mutual funds, at least not in the sense that Dow indexed funds will have to buy shares. That's because the most popular funds tracking the Dow are the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) and the iShares Dow Jones U.S. Index Fund (ETF) (NYSE: IYY).