IVV’s Sector Weightings Help it Perform Well



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.

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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