S&P 500 is one of the many S&P Dow Jones Indices and is considered to be the top-most single indicator of large-cap US stocks. S&P 500 Index, the first US market-cap-weighted stock market index, was created way back in 1957 and remains one of the oldest indexes with over 70-year live track record.
Here, we look at some of the top interesting facts about the index.
1. Top index to track
S&P 500 Index includes nearly 500 leading corporates across about 11 sectors and covers about 80 per cent of the market capitalisation of the US stock exchanges. Nearly $10 trillion of money is indexed or benchmarked to the index. Of this about $3.4 trillion comprises indexed assets itself. This makes S&P 500 Index the most widely-traded index in the world.
2. World exposure
The top 4 passive funds by AUM worldwide track S&P 500 Index. In 2018, more than 40 per cent of the sales of S&P 500 constituents were reported from foreign countries. The S&P 500 Index has the large-cap companies as constituents and is considered to have a very low correlation with the Indian equity market. Combining assets that are less/not correlated help reduce portfolio volatility, thereby improving risk-adjusted returns
3. Sector breakdown
The top three sectors in the S&P 500 are Information Technology, Health Care and Communication Services, totaling about 50 per cent of the index. The breakdown of various sectors is as follows:
- Information Technology – 25.7%
- Health Care – 15.4%
- Communication Services – 10.8%
- Financials – 10.6%
- Consumer Discretionary – 10.5%
- Industrials – 7.9%
- Consumer Staples – 7.4%
- Utilities – 3.3%
- Energy – 3%
- Real Estate – 2.9%
- Materials – 2.5%
4. Top 10 Constituents By Index Weight
If you want to own the prime stocks of the S&P 500 index, the top three stocks are Microsoft, Apple and Amazon by index weightage. The top stocks are as follows:
- Microsoft Corp – Information Technology
- Apple Inc. – Information Technology
- Amazon.com Inc – Consumer Discretionary
- Facebook Inc A – Communication Services
- Alphabet Inc A – Communication Services
- Alphabet Inc C – Communication Services
- Johnson & Johnson – Health Care
- Berkshire Hathaway – Financials
- Visa Inc A Information – Technology
- JP Morgan Chase & Co – Financials
5. S&P 500 Vs Nasdaq
While Nasdaq is an Information Technology heavy index, the S&P 500 Index is a much broad-based index. There are 100 stocks listed on Nasdaq while on S&P 500 Index, there are 500 stocks, thus giving a much diversified flavour to those who want to diversify their international portfolio. Further, there are large and mid-cap stocks listed on Nasdaq while S&P 500 Index has only large-cap stocks.