Top 4 Mutual Fund Holders of Microsoft (MSFT)


Microsoft Corporation (NYSE: MSFT) was formed in 1975 by Bill Gates and Paul Allen, as they rushed to create an operating system for the Altair 8800 microcomputer. The Altair 8800 was arguably the first microcomputer that kicked off the computer revolution, and with it came Altair Basic, a licensed version of Microsoft Basic. Microsoft Basic was the company’s first licensed commercial product, as it licensed various versions to Apple Computers (NASDAQ: AAPL), Commodore, and IBM (NYSE: IBM). Revenues for the company totaled just $16,005 in 1976.

The iconic tipping point came when IBM was planning to launch a personal computer but lacked an operating system. While Microsoft did not have an operating system, Bill Gates successfully bluffed IBM to win the contract on Aug. 12, 1981. Rather than program one from scratch, Gates negotiated a deal to purchase the 86-DOS product from Seattle Computer Products for less than $100,000 and licensed it to IBM for a royalty fee on every PC it would produce. The IBM PC launch turned out to be an unprecedented success, catapulting Microsoft’s gross sales to $55 million in 1983. Microsoft launched the first iteration of its Windows franchise in 1985.

The company went public in 1986 at $21 per share. Since then, Microsoft has grown into a consistently strong revenue performer with $143 billion in revenue as of the fiscal year ending June 30, 2020.

Microsoft’s most popular brands include Windows, Office 365, Bing, MSN, Skype, Exchange, and cloud applications Azure, SQL Server, and .NET. Microsoft is a component in the big three benchmark indexes: Dow Jones Industrial Average (DJIA), Standard and Poor’s 500 (S&P 500), and the Nasdaq-100 index.

Here are the four largest mutual funds invested in Microsoft stock.

Microsoft’s top mutual fund holder is the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX). The fund holds more than 212 million shares with a market value of more than $53.70 billion as of April 30, 2021.

The VTSAX provides broad exposure to the U.S. stock market with $1.2 trillion in assets under management (AUM). The VTSAX has a five-year annualized return of 17.67%, and the fund’s expense ratio is 0.04% as of April 30, 2021.

The VTSAX has a minimum initial investment amount of $3,000, but Vanguard also offers an exchange traded fund (ETF) called the Vanguard Total Stock Market ETF (VTI). The VTI is similar to the total market fund but only costs the price of one share as an initial investment.

Microsoft’s second-largest mutual fund holder is the Vanguard 500 Index Fund Admiral Shares (VFIAX), which holds more than 155 million shares for a market value of $39.10 billion as of April 30, 2021.

The Vanguard 500 tracks the Standard and Poor’s 500 Index (S&P 500) by investing in 500 of the largest U.S. companies across various sectors. With nearly $732 billion in assets under management, the VFIAX has earned a five-year annualized return of 17.38%. The fund has an expense ratio of 0.04% as of April 30, 2021.

The minimum investment requirement for Vanguard’s VFIAX is $3,000, but an ETF version is available called the Vanguard S&P 500 ETF (VOO). Although the holdings within the VOO ETF are similar to the VFIAX, it has a lower initial investment requirement, which is the cost of one share.

The SPDR S&P 500 ETF Trust (SPY) is Microsoft’s third-largest mutual fund holder of the company’s stock. Managed by State Street Global Advisors, the SPY tracks the S&P 500 Index. The SPY ETF owns nearly 76 million shares for a market value of approximately $18.70 billion as of May 20, 2021.

The SPY has $353.3 billion in assets under management and an expense ratio of .0945% as of May 20, 2021. The fund’s five-year annualized return is 17.25% as of April 30, 2021.

The Fidelity 500 Index Fund (FXAIX) is Microsoft’s fourth-largest mutual fund holder. The Fidelity 500 tracks the S&P 500 Index with $328 billion in assets under management. The FXAIX owns more than 69 million shares of Microsoft, representing nearly $16.30 billion in market value as of March 31, 2021. Fidelity’s FXAIX has no investment minimum, an expense ratio of .015%, and its five-year annualized return is 17.41% as of April 30, 2021.

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