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IVV’s Sector Weightings Help it Perform Well

Sushree Mohanty - Author

Nov. 3 2017, Updated 7:31 a.m. ET

Sectors that dominate the fund’s holdings

The iShares Core S&P 500 ETF (IVV) has, in total, 506 holdings from the information technology, financial, healthcare, and consumer discretionary sectors dominating 65% of the fund’s holdings.

In 2017, these sectors have shown staggering growth. The information technology (XLK) sector has risen 26.1% while the healthcare sector (XLV) has risen 19.2% YTD (year-to-date). The financials (XLF) and consumer discretionary (XLY) sectors aren’t far behind, each returning 15.1% and 11.7% YTD.

The chart above shows the YTD (as of October 26) performance of the information technology, financial, healthcare, and consumer discretionary sectors.

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As we discussed in the previous part of this series, the US economy (SPX-Index) and the labor market have shown some impressive numbers this year, and so have corporate earnings. Factset reports showed that S&P 500 earnings grew 14.0% in 1Q17 and 10.3% for 2Q17, led by the financials, information technology, and consumer discretionary spaces.

IVV constituents are high-growth, mature companies

The iShares Core S&P 500 ETF’s (IVV) top ten constituents are mature companies with stable growth belonging to the information technology, consumer discretionary, healthcare, financial, and energy sectors.

Apple (AAPL) at 3.7%, Microsoft (MSFT) at 2.8%, Facebook Class A (FB) at 1.8%, Amazon (AMZN) at 1.8%, and Johnson & Johnson (JNJ) at 1.7% are the top five companies in the fund by percentage of net assets. The companies’ stock prices have grown 35%, 54.4%, 64.4%, 60.2%, and 41.8%, respectively, in the last two years. These companies are mature companies with higher growth prospects that are capable of generating better returns, contributing to the fund’s performance.


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