As a market capitalization weighted index, the S&P 500 (^GSPC) has undergone some noteworthy sector shifts over the years.
For example, financial services spent significant time as the S&P 500’s largest sector weight. Then financial crisis struck, punishing bank stocks and sending financials to a weight of less than 8.6% by the March 9, 2009 market bottom. [Comparison of Major Sector ETFs]
These days, technology leads the way at 17.7 followed by financials at 16.3% as of Nov. 22. Only materials, utilities and telecom do not command double digit weights within the benchmark index.
S&P 500 Sector Weights
Chart Courtesy: State Street Global Advisors
Financials’ spot in second place makes some sense as the Financial Select Sector SPDR (XLF) is the second-best performer among the nine sector SPDR ETFs since March 9, 2009. XLF has posted a gain of 271% through Nov. 22, well ahead of the 179.1% gained by the Technology Select Sector SPDR (XLK) .
In fact, financials are closing in on tech for the top spot. “The sectors that have gained ground in 2013 include Financials, Health Care, Consumer Discretionary and Industrials. Energy, Consumer Staples, Materials, Utilities and Telecom have all lost ground,” according to Bespoke Investment Group.
Chart Courtesy: Bespoke Investment Group
A case can be made that the consumer discretionary sector, although on the rise as the Bespoke data indicate, is under-represented even at a weight of 12.5%. The sector has gained 420 basis points, or about 50%, in prominence in the S&P 500 since March 2009, but the Consumer Discretionary Select Sector SPDR (XLY) is far and away the best sector SPDR over that time with a gain of 333%. [Sector ETF Investing: A Long Term Perspective]
Interestingly, health care’s weight of 13.3% today is 280 basis points below where it was on March 9, 2009, but 120 basis points higher than at the end of last year. Interesting because the Health Care Select Sector SPDR (XLV) is the top SPDR this year with a gain of 40%.
The Guggenheim S&P Equal Weight ETF (RSP) is another interesting case. RSP has a reputation for outperforming the S&P 500, something it has done again this year. RSP’s overweight (16.7%) to discretionary has helped.
However, RSP is also underweight health care by 220 basis points and underweight tech by 470 basis points.
RSP Sector Weights