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By Jake Mann

At the end of December, we discussed Apple's (AAPL) secret hedge fund over on Insider Monkey (see Where is Apple's Cash Really Invested?). The entire concept of this investment vehicle isn't as nefarious as it sounds, but it has flown relatively under the radar of most retail investors.

We can't take credit for its discovery; Zero Hedge originally did a feature in September on how Cupertino manages its mountain of cash, cash equivalents, and marketable securities, which has now grown to a little over $120 billion.

Just a quick note: to some readers, this $120 billion figure may seem a bit small; that's because a bevy of sources out there have already begun to incorporate Q1 FY2013 estimates into their analyses. Consider this breakdown provided on Business Insider, in which Apple is expected to have $300 billion in investable cash by the end of FY2015.

Assuming Apple grows this base by an average of $15 billion a quarter over its next three fiscal years, the company would hit this unofficial target. Thus, once Apple releases next quarter's financials, we can expect its investable cash to hit a total somewhere above the $130 billion mark.

On Zero Hedge, it was revealed that Braeburn Capital, an asset manager in Nevada, is responsible for investing the majority of this enormous pile of dough.

In an additional article by Tim Worstall on Forbes, it is mentioned that Apple's cash is invested in a variety of asset classes, courtesy of its yearly 10-K. Last week, we updated Worstall's original analysis-which covered FY2011-with the latest numbers from FY2012.

Now, the first time around, we simply displayed year-to-year changes among the assets Apple's cash was invested in, which include: money market funds, mutual funds, U.S. Treasuries, U.S. agency securities (like Fannie and Freddie), MBS, and many more.

This time, though, we're going to delve into the details a bit deeper, giving you the skinny on three-year growth and an ever-handy asset allocation breakdown.

FY2012

FY2011

FY2010

Money market funds

$1.5

$1.9

$2.8

Mutual funds

2.4

1.2

-

U.S. Treasury securities

20.1

10.7

9.9

U.S. agency securities

19.5

13.5

8.7

Non-U.S. government securities

5.5

5.6

2.6

CD and time deposits

2.2

4.2

2.7

Commercial paper

2.1

2.9

3.2

Corporate securities

46.3

35.2

17.3

Municipal securities

5.6

3.4

1.9

Mortgage and asset-backed securities

11.9

-

-

Total assets invested (excluding cash)

$117.1

$78.6

$49.1

*Data via Apple's past two 10-Ks, here and here.

**In billions, rounded to the nearest hundred million.

Above is the entire layout of Apple's investable assets excluding cash. For those keeping track, Apple holds roughly $2 billion to $3 billion in Benjamins each year, choosing to invest the rest in a variety of ways.

As can clearly be seen, the entire size of Apple's total asset base has grown significantly since the end of FY2010, by an average rate of nearly 70% a year. While the company has elected to hold a relatively consistent amount of its investments in CDs, paper, and money market funds, it has boosted its holdings in corporate securities, Treasuries and agency securities significantly.

Additionally, a new position in MBS and other asset-backed securities was established in the past year.

Here's a better illustration of the asset allocation strategy of Apple and its so-called "secret" hedge fund.

FY2012

FY2011

FY2010

Money market funds

1.28%

2.42%

5.70%

Mutual funds

2.05%

1.53%

-

U.S. Treasury securities

17.16%

13.61%

20.16%

U.S. agency securities

16.65%

17.18%

17.72%

Non-U.S. government securities

4.70%

7.12%

5.30%

CD and time deposits

1.88%

5.34%

5.50%

Commercial paper

1.79%

3.69%

6.52%

Corporate securities

39.54%

44.78%

35.23%

Municipal securities

4.78%

4.33%

3.87%

Mortgage and asset-backed securities

10.16%

-

-

*Figures are percentages of total assets invested (excluding cash)

This paints a much richer picture of exactly how Apple's cash has been invested as it has grown so momentously over the past two years. In 2011, the company placed a much greater percentage of its assets in corporate securities before electing to trim its allocation in equities this past year.

As the first chart indicates, Apple did increase the dollar-value of its holdings in mutual funds, Treasuries, agency securities, corporate securities, municipal securities, mortgage and asset-backed securities in 2012.

Looking at the asset allocation, though, we can see that of these bullish moves, only mutual funds, Treasuries, munis and MBS/ABS actually saw a boost in percentage terms. As mentioned in our first analysis last month, it's unfortunate that we cannot see the specific equities Apple is a shareholder in, but it is notable that this class holds the largest portion of its portfolio by far.

So, while it's tempting for those who own shares of Apple to consider this information financial gobbledygook, it's crucial to recognize that the company is currently sitting on close to $7 billion in cash, cash equivalents, and short-term marketable securities.

Considering the size of this highly liquid position, we can understand, then, why Wall Street analysts like Piper Jaffray's Gene Munster are so bullish on the prospects of a dividend boost.

With a projected dividend yield slightly above 2%, Apple compensates income-investors with a modest payout, but a yield similar to that of competitors like Cisco (CSCO) (2.7%) or Microsoft (MSFT) (3.4%) would be much more desirable.

Originally discussed in mid-December (see 3 Things That Can Boost Apple in 2013), Munster is hopeful for "an increased dividend in April," and we'd have to agree.

Source: Taking A Longer Look At Apple's Secret Hedge Fund