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Tag Archives: sector

Nov 10, 2022

Examining Equal Weight

In this tumultuous market characterized by Fed rate hikes, elevated inflation and a strong dollar, mega-cap growth companies have suffered heavy losses, paced by recent “Big Tech” earnings disappointments from Meta, Microsoft, Alphabet, Amazon and others. The S&P 500® Top 50 declined by 19% over the past 12 months, underperforming the S&P 500 by 5%….

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Nov 9, 2022

Watch Your Weighting Scheme

2022 has witnessed a recalibration across financial markets, as investors have digested the impact of higher interest rates amid elevated inflation. Despite bouts of optimism that the U.S. Federal Reserve would take a more dovish stance, and better-than-expected corporate earnings, Exhibit 1 shows that the vast majority of large-, mid- and small-cap indices declined through…

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Aug 17, 2022

What’s Inside the Real Estate Select Sector?

Explore how a rules-based approach to tracking real estate companies in the S&P 500® impacts dividend yield and diversification.

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Aug 17, 2022

Defensive Dynamics

2022 has been a tumultuous year characterized by reversals, with the S&P 500® down 20% in the first six months of the year and rebounding by 9% in July. In this uncertain environment, seeking defensive exposures via sectors could mitigate portfolio risk, but a nuanced perspective may be required to understand which sectors offer the…

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Jul 7, 2022

Tumultuous Trends

The S&P 500® posted its worst first-half performance since 1970,1 as inflation concerns, Fed rate hikes and slowing economic growth have weighed on markets. Mega caps were hit particularly hard, with the S&P 500 Top 50 posting a loss of 22%, underperforming the S&P 500 by 2%. Exhibit 1 shows that Information Technology was the…

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Jun 3, 2022

These Go to 11: Diversification with S&P 500 Sectors

Many strategies (including passive ones) hold large allocations to Information Technology. A “barbell” approach can mitigate risk from high exposure to one sector by pairing it with another. Do you remember sending your first email? For many, it was likely around the mid-1990s when a “googol” was still 10^100 rather than a verb and the…

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Mar 30, 2022

Sizing Sectors

After peaks in S&P 500® concentration, the S&P 500 Equal Weight Index has tended to outperform, suggesting that there is a relationship between changes in concentration and the relative performance of equal weighting. But, does this relationship also occur at the sector level? Using the historical adjusted HHI (Herfindahl-Hirschman Index), we’ve previously established that concentration…

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Mar 14, 2022

Contemplating Concentration

After the exceptional performance of large-cap stocks in recent years, concentration concerns naturally come to mind. There are many ways to measure concentration. A simple method is to add up the weight of the top names, but the drawback with this approach is it doesn’t incorporate all the constituents in an index. The Herfindahl-Hirschman Index…

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Mar 8, 2022

No Easy Answer: Sector and Factor Responses to U.S. Rate Hikes

Although higher rates are generally seen as negative for risk assets, the initial stages of a monetary tightening cycle have not been disastrous for the U.S. stock market historically. However, while the overall market may muddle through just fine, the same may not be true for the different sectors and factors that compose a broad…

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Sep 22, 2020

A Practical Look at How Risk is Shifting in Sectors

How can the relationship between sectors and factors help investors identify market regime changes and inform allocations? S&P DJI’s Anu Ganti and Hamish Preston take a closer look at market trends through the lens of S&P Composite 1500® data.     Learn more: https://www.spglobal.com/spdji/en/research/article/the-sp-composite-1500-an-efficient-measure-of-the-us-equity-market/

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