While Main Street U.S. investors are bombarded with offers from banks, such as Capital One Financial Corp, offering bank account yields of as much as 1 percent, Apple may be settling for about that or less for its stash, which is bigger than the gross domestic product of many smaller nations.

And comparisons with fellow hoarders in the tech world, such as Microsoft Corp and Google, indicate that in this area at least, the most valuable publicly traded American company is probably underperforming.

With the mountain growing at an extraordinary rate - Apple's pile of money rose by more than $16 billion to $97.6 billion in the final quarter of last year, the weak returns may strengthen the arguments of investors who think it might be time Apple started returning some money to shareholders through a dividend.

Otherwise, given the phenomenal success of its iPhone in particular, Apple could at current rates of cash generation go through the $200 billion level sometime in 2013.

Apple said in its annual results filing that its cash and investments - worth $81.6 billion at that stage - earned just 0.77 percent in the fiscal year ended September 24, 2011. That was a hair above the 0.75 percent return earned the previous year and down from 1.43 percent in fiscal 2009 and 3.44 percent in 2008.

"Clearly it's low - absolutely and relatively," said Robert Willens, president of New York consulting firm Robert Willens LLC and a veteran accounting analyst on Wall Street.

When asked about its cash management, an Apple spokesman refers to the company's latest regulatory filing, which says its investment policy and strategy are focused on preservation of capital and supporting the liquidity requirements of the company. It also said it invests primarily in "investment grade" securities.

"They are not running themselves like a hedge fund. They are running it like a liquidity portfolio to meet their business needs," said Alex Roever, head of short-term fixed income strategy at J.P. Morgan Securities in New York.

And yet some of its peers appear to be able to eke out higher returns without seeming to take greater risks.

Microsoft, which had $59.29 billion of cash, liquid securities and other investments at the end of 2011, and Google with $44.63 billion in its pile, do not provide comparisons for a weighted average interest rate earned.

However, a look at their returns using a number of different measurements suggest that they are working their money harder with riskier investments than Apple and generating higher investment returns, an analysis by Reuters showed.

In 2011, for example, Google recorded a gross realized gain of $381 million and net unrealized gain of $469 million, for a total $850 million, on its liquid marketable securities - which were up to $34.6 billion by the end of the year.

Google declined to comment on its rate of return, though it reported gross unrealized gains and losses on cash equivalents were not material at the end of the past two years. Overall, though, the figures suggest returns may have been almost 2 percent.

Meanwhile, Microsoft in its fiscal year ended June 30 recorded net unrealized gains of $2.83 billion on its cash and other investments, which totaled $63.64 billion at the end of that period. Most of that gain came from gains on common and preferred stock holdings.

It also recorded dividends and interest income of $900 million. Its filings show that Microsoft, which also declined comment on its rate of return and investment policies, dabbles in the trading of oil, metal and grain futures and options.

Apple, by contrast, recorded net realized gains of just $106 million in its year to September 24 from sales of securities, and net unrealized gains of just $80 million - and this was from an accumulation of $81.6 billion by that date.

If you total the 2011 quarterly interest incomes of the companies and then divide by the average size of their portfolios - albeit an imperfect comparative measurement - then you come up with similar indications of performance.

Using that very rough comparison of Apple's annual investment return with those of Microsoft and Google, Apple posted a total return of just 0.53 percent in calendar year 2011, Microsoft earned 1.52 percent, and Google 1.47 percent.

APPLE HISTORY KEY

Some investors and strategists say it would be unfair to suggest that Apple and its Chief Financial Officer Peter Oppenheimer have not tried hard enough to put Apple's money to work. They argue that protecting the cash is the priority and that chasing yield isn't his job.

"Their core competency is not investing cash. It's making iPhones," said Anthony Carfang, partner at consulting firm Treasury Strategies Inc. in Chicago. "I would be concerned if these guys thought they were hotshot investment managers looking to beat the market."

Apple's financial problems in the 1990s means it tends to have a more conservative philosophy towards money management than the others who since listing have never struggled for cash, analysts said. Unlike Microsoft and Google, Apple does not own any stocks as investments, for example.

But a look at the three companies disclosure of the investment categories in which they place their cash suggests that Apple now isn't being that much more conservative than Microsoft and Google - in some ways it may be taking on more risk.

For example, by the end of 2011, Apple had about 40 percent of its hoard in corporate securities, up from 36 percent a year earlier, while at Google it was more like 14 percent and at Microsoft around 17 percent.

Indeed, Apple may have suffered lower returns because it didn't have as much as the others in the U.S. Treasury market, which had a barnstorming year in 2011. Its Treasury and agency holdings by the end of 2011, were about 36 percent, against more than 50 percent at Microsoft and Google.

In the past year, Apple also increased its holdings of longer-dated bonds, which would pay off if long-term interest rates fall but could sour if they rise. It reduced its stakes in safer but lower-yielding short-term bonds in favor of higher-yielding longer-dated debt, resulting in higher duration risk. It held $67.4 billion in long-term debt at the end of December, double its level a year earlier.

There is, though, at least some hope that Apple's returns may be catching up Google.

In the quarter ended December 31, Apple reported dividends and interest income of $137 million, a period in which Microsoft earned $182 million. Google said it lost $18 million from interest and other income in that period, though this included an impairment charge of $88 million for its investment in troubled wireless company Clearwire Corp.

(Additional reporting by Poornima Gupta in San Francisco; Editing by Martin Howell)

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