Weights of the Largest Stocks within Each Sector of S&P 500

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In addition to understanding the SP500 at the sector level from this post here, I wanted to understand the composition of each sector and how has the weights shifted throughout the year. I wanted some insights on the largest stocks today and whether large is always better in growth or is it just a selected few that lead the charge.

Consumer Discretionary

In the consumer discretionary group, the only 2 stocks that saw significant weighting changes was from Amazon and Tesla. Amazon went from a 6% weighting in the sector to 35% in 2021. Tesla went from a 2% weighting to over 15%. The sector is extremely concentrated as the top 10 stocks currently represents over 70% of the sector.

In terms of growth, Amazon and Dominos had a 40X+ return. The next 6 still net an impressive return of 20X. The top 25 averages a 14X return.

Information Technology

Surprisingly, in terms of weighting, the only stock that had a significant change was Apple; growing from 9% sector weight to 23% in 2021. The rest of the stocks kept fairly consistent with the top 2 stocks [Apple and Microsoft] representing 43% of the weight in 2021. The IT sector is extremely concentrated as the top 10 stocks represents almost 70% of the whole sector.

At a growth perspective, it’s mainly dominated by the semiconductor industry (6 out of 10 stocks are related to semiconductors) with Nvidia netting an impressive return of almost 50X. The top 25 averages a 16X return.

Health Care

There hasn’t been any major significant weighting changes in the top 10 stocks. However, the only stock that have seen and increase in market share is UnitedHealth group. The sector is fairly diversified as the top 10 stocks only represents 50% of the sector.

I’m not too familiar with the subsectors in the health care sector so not much insights I can add in the top 25 % stocks below. The top 25 averages a 16X return, similar to the IT sector.

Communication Services

Google, Facebook and Netflix seen the most increase in weighting since 2008. The market share was taken from legacy communication companies such as the telecoms. Looking back, this was evident with the significant growth of social media and streaming services. Lastly, this sector is surprisingly concentrated with the top 10 stocks representing almost 90% of the sector.

Netflix netted a 140X return which is incomparable to any other stocks in its sector. There isn’t a clear subsector winner as the top growth companies span across multiple business lines. The top 25 averages a 12X return.

Financials

Not much insights here as the concentration is between investment banks and national banks.

The growth in the industry was mainly driven by market makers and companies that provide financial services and data. The top 25 stocks have only growth by 7X on average.

Consumer Staples

The 2 stocks that have significantly increased their weight was Costco (from 2% to 7%) and Estee Lauder (from 1% to 5%). Rest have remained consistent. The sector is also extremely concentrated with the top 10 stocks representing about 75% of the sector.

No clear patterns here when it comes to growth. It ranges from beverages, beauty, household goods and more. The top 25 stocks only averaged a 3X return.


For the sectors below, I’m not too familiar or have done enough research in these sectors to be able to provide any valuable insights. I’ll only provide the charts for your viewing.

Industrials

Materials

Energy

Real Estate

Utilities


One learning I got out of this whole exercise is that it’s way more important to identify growing macro trends than to narrow down to the individual stocks. For example, ecommerce, digital advertising (social media + search), streaming and ML/AI has been the trends this last decade.

It’s easy to identify the trends today, but the tricky part is to identify the trends of the future. Web3, electrification and the aging population are key themes I’m interested in but only the future will tell.

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