s&p 500 Sector Weights
s&p 500 Sector Weights

s&p 500 Sector Weights : The S&P 500 is arguably the most common index used to track the performance of the U.S. stock market. It is based on the stock prices of 500 large companies that trade on the New York Stock Exchange or the NASDAQ.

s&p 500 Sector Weights

GICS Sector6/30/202012/31/201912/31/201812/31/201712/31/201612/31/2015
Communications10.78%10.39%10.13%
Consumer Discretionary10.83%9.75%9.94%12.21%12.03%12.89%
Consumer Staples6.97%7.21%7.42%8.20%9.37%10.05%
Energy2.82%4.35%5.31%6.08%7.56%6.50%
Financials10.09%12.94%13.30%14.79%14.81%16.48%
Health Care14.63%14.20%15.54%13.78%13.63%15.17%
Industrials7.99%9.05%9.20%10.27%10.27%10.05%
Information Technology27.47%23.20%20.12%23.78%20.77%20.69%
Materials2.52%2.66%2.73%2.99%2.84%2.76%
Utilities3.07%3.32%3.34%2.94%3.17%2.99%
Real Estate2.84%2.93%2.97%2.89%2.89%
Telecoms (discont.)2.06%2.66%2.43%
s&p 500 Sector Weights Chart

Latest s&p 500 Sector Weights Decline as of 30 April 2020

  • Information technology: 25.7%
  • Health care: 15.4%
  • Communications: 10.8%
  • Financials: 10.6%
  • Consumer discretionary: 10.5%
  • Industrial: 7.9%
  • Consumer staples: 7.4%
  • Utilities: 3.3%
  • Energy: 3%
  • Real estate: 2.9%
  • Materials: 2.5%

How is the S&P 500 weight Calculated?

s&p 500 Sector Weights
s&p 500 Sector Weights

Today, we’re going to break down how the S&P 500 is actually calculated. And if you think you already know everything there is to know about the S&P 500, you hear about it all the time, stick with me. I think you’ll  learn something new. 

Now, one of the reasons we  care so much about the S&P 500 is because it’s actually considered a relatively stable way to invest your money. This is the returns of the index over the last five years. So we start in October of  this year, mid-October, and go back five years  to mid-October of 2014. And as you can see, if you put  your money in five years ago you’d actually get a  pretty stable return despite a little bit of  turbulence in the latest year.   

Now, the S&P 500 is reflective  of the large cap US stocks space because the committee  that selects the companies keeps in mind how much of  a sector breakdown each industry should get so  that it reflects the larger cap    stocks space. 

So, as an example, if technology companies represent about 20 per cent of total large cap companies in the US, they’re going to make sure that the companies in the S&P 500 also reflect about a 20 percent technology representation. And they actually  even break it down into subcategories from there, but we’re not going to get into all that.   

What we are going to get into is how this thing is actually calculated. Now, as you may know there are  500 companies in the S&P 500, but don’t get confused. There are actually 505  listings on the S&P 500. And that’s because the listings refer to some companies that have  what’s called a dual class share system. And dual class just means  say you’re Facebook. You have class A shares, and you have class B shares. The class A shares  give more voting rights to those who hold them. And actually, the S&P 500 decided recently we’re not going to let any  more companies in that have    this dual class share system. 

But that is why despite  there being 500 companies, there are about 505  listings on the S&P 500. So when we say large cap,  we’re talking about large capitalization.  And that means we do actually  need to figure out what the market capitalization is  of each company in the S&P 500. And that’s where we start. OK, so let’s say we’re  starting with Microsoft, which just happens to be the  largest company in the S&P 500. You first start with the price of their shares. And then to get the market  cap what you usually do is you multiply by the  quantity of shares out there. Price times quantity  equals market cap. But for the S&P 500 we have  to do one additional thing.

See, the market cap of the companies in the S&P 500 are actually called  float-adjusted market caps, which means we need to take the  quantity of shares out there.  And we need to  actually figure out what percentage of those  shares are actually trade-able on the markets, i.e. not held closely by executives,  or by other private owners. So we multiply by  the float – again, the percentage of those  shares that are out there ready to trade. And this gives us the  float-adjusted market cap of a company. That’s just one company, though.   

Remember, there’s 500  companies in this index, so you’re going to repeat this 500 times. I’m not going to  make 500 lines here, You get the idea. But once you have all of those,  you’re going to sum them up. And what you’re going to get is the total market cap of all the companies  in the S&P 500, which right now is about $24tn. But we’re not done quite yet. There’s still one more  step because the S&P 500 isn’t $24tn. Right here, you can  see it’s $3,000. So what we do is we put a  divisor under this number. And S&P doesn’t  necessarily always share what exactly the  divisor is, but just    know it’s a number that breaks  the sum down to something a little bit more manageable. 

And also, don’t forget, The S&P 500 is  changing all the time. The companies in here, they issue more shares, or their  share price changes, or they do a stock split, or their price falls so low that they’re not actually considered a large cap company any more, and they need  to drop of the index, which    means a new company needs to  come on to take their place. These changes are happening all the time. And so this divisor is  really key in making sure that the index doesn’t  change dramatically just because, for  example.

A company needs to come off and have a new company relisted on it. And this divisor’s changed if that happens at the end of the  market so that the next day when markets open, that  index has not changed, even though, let’s say, there’s a different company with a different market cap. So the way that the S&P 500 is calculated actually gives us a good idea of what’s  happening in the large cap US stock market, which is why  it’s become one of the most popular indices in the world.

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