Connect with us

Markets in a Minute

All S&P 500 Sectors and Industries, by Size

Published

on

View the full-size version of this infographic. Buy the poster.

S&P 500 sectors and industries

S&P 500 Sectors and Industries

All of the S&P 500 Sectors and Industries, by Size

View the high resolution version of this infographic. Buy the poster.

The S&P 500 is one of the most widely quoted stock market indexes, but do you know how it’s comprised? From soft drinks to semiconductors, the benchmark index tracks an extremely wide variety of industries across the U.S. economy.

In this Markets in a Minute chart from New York Life Investments, we show every sector and its underlying industries by size.

A Sector View

At a high level, the S&P 500 tracks broad segments of the economy known as sectors. Here’s how the percentage allocation in the index breaks down:

SectorPercent of S&P 500 Index
Information Technology27.48%
Health Care14.58%
Consumer Discretionary11.18%
Communication Services10.90%
Financials9.89%
Industrials7.90%
Consumer Staples7.05%
Utilities3.13%
Real Estate2.80%
Materials2.56%
Energy2.53%

Data as of July 31, 2020.

Information technology, which makes up almost 28% of the index, has outperformed other sectors by a wide margin so far in 2020. At the other end of the spectrum, real estate, materials, and energy each make up less than 3% of the index.

Diving Deeper: An Industry View

While investors are likely familiar with sectors, the specific underlying industries may be lesser known. Below is a complete industry breakdown of the S&P 500.

Click “Next” to view industry breakdowns of each sector

SectorIndustry% of Sector
Communication Services
Advertising0.63%
Alternative Carriers0.32%
Broadcasting1.23%
Cable & Satellite9.86%
Integrated Telecommunication Services15.22%
Interactive Home Entertainment4.18%
Interactive Media & Services51.52%
Movies & Entertainment14.69%
Publishing & Printing0.22%
Communication Services (cont'd)Wireless Telecommunication Services2.12%
Consumer Discretionary
Apparel Retail3.39%
Apparel, Accessories & Luxury Goods1.27%
Auto Parts & Equipment0.94%
Automobile Manufacturers1.89%
Automotive Retail2.97%
Casinos & Gaming0.98%
Computer & Electronics Retail0.75%
Consumer Electronics0.47%
Consumer Discretionary (cont'd)Department Stores0.10%
Distributors0.71%
Footwear4.00%
General Merchandise Stores4.40%
Home Furnishings0.33%
Home Improvement Retail13.16%
Homebuilding2.19%
Hotels, Resorts & Cruise Lines2.05%
Household Appliances0.34%
Housewares & Specialties0.21%
Consumer Discretionary (cont'd)Internet & Direct Marketing Retail47.65%
Leisure Products0.31%
Restaurants10.44%
Specialized Consumer Services0.09%
Specialty Stores1.36%
Consumer Staples
Agricultural Products1.25%
Brewers0.37%
Distillers & Vintners2.23%
Drug Retail1.57%
Consumer Staples (cont'd)Food Distributors1.41%
Food Retail1.43%
Household Products26%
HyperMarkets & Super Centers17.15%
Packaged Foods & Meats14.79%
Personal Products2.39%
Soft Drinks21.13%
Tobacco10.28%
Energy
Integrated Oil & Gas50.88%
Energy (cont'd)Oil & Gas Equipment & Services8.13%
Oil & Gas Exploration & Production20.30%
Oil & Gas Refining & Marketing11.51%
Oil & Gas Storage & Transportation9.18%
Financials
Asset Management & Custody Banks8.08%
Consumer Finance4.40%
Diversified Banks27.43%
Financial Exchanges & Data11.91%
Insurance Brokers5.77%
Financials (cont'd)Investment Banking & Brokerage6.63%
Life & Health Insurance4.08%
Multi-line Insurance1.84%
Multi-Sector Holdings14.23%
Property & Casualty Insurance7.41%
Regional Banks7.91%
Reinsurance0.33%
Health Care
Biotechnology15.66%
Health Care Distributors1.65%
Health Care (cont'd)Health Care Equipment25.73%
Health Care Facilities1.06%
Health Care Services4.80%
Health Care Supplies1.64%
Health Care Technology0.54%
Life Sciences Tools & Services8.56%
Managed Health Care11.30%
Pharmaceuticals29.08%
Industrials
Aerospace & Defense20.41%
Industrials (cont'd)Agricultural & Farm Machinery2.58%
Air Freight & Logistics7.85%
Airlines2.27%
Building Products5.57%
Construction & Engineering0.78%
Construction Machinery & Heavy Trucks6.61%
Diversified Support Services2.09%
Electrical Components & Equipment5.66%
Environmental & Facilities Services3.20%
Human Resource & Employment Services0.27%
Industrials (cont'd)Industrial Conglomerates13.56%
Industrial Machinery10.12%
Railroads11.13%
Research & Consulting Services4.11%
Trading Companies & Distributors2.48%
Trucking1.32%
Information Technology
Application Software8.79%
Communications Equipment3.42%
Data Processing & Outsourced Services15.67%
Information Technology (cont'd)Electronic Components0.74%
Electronic Equipment & Instruments0.53%
Electronic Manufacturing Services0.48%
Internet Services & Infrastructure0.54%
IT Consulting & Other Services4.27%
Semiconductor Equipment1.95%
Semiconductors15.10%
Systems Software24.00%
Technology Distributors0.22%
Technology Hardware, Storage & Peripherals24.29%
Materials
Commodity Chemicals6.71%
Construction Materials4.11%
Copper2.71%
Diversified Chemicals1.46%
Fertilizers & Agricultural Chemicals6.71%
Gold8.02%
Industrial Gases27.73%
Metal & Glass Containers3.47%
Paper Packaging8.80%
Materials (cont'd)Specialty Chemicals28.45%
Steel1.82%
Real Estate
Health Care REITs6.78%
Hotel & Resort REITs1.00%
Industrial REITs12.24%
Office REITs5.85%
Real Estate Services1.94%
Residential REITs11.20%
Retail REITs7.51%
Real Estate (cont'd)Specialized REITs53.48%
Utilities
Electric Utilities62.41%
Gas Utilities1.53%
Independent Power Producers & Energy Traders1.20%
Water Utilities3.15%
Multi-Utilities31.71%

Data as of July 31, 2020.

In total, the S&P 500 tracks 126 industries, and each one presents unique risks and opportunities.

Biotechnology, which focuses on novel drug development and clinical research for treating diseases, has gained renewed interest during the COVID-19 pandemic. While successful drugs can offer high potential returns, about 90% of clinical programs ultimately fail. Investors can screen potential companies for various factors including corporate sponsor support, ample long-term funds, and a pipeline with more than one product.

Another example is aerospace and defense. Due to the high barriers to entry and significant funding from the U.S. government, this can be an attractive industry for investors. However, it can be impacted by the current government’s defense policies. For example, the aerospace and defense industry performed well after President Donald Trump was elected, and it may be influenced by the November 2020 election results.

The Big Picture

With a full view of the S&P 500 sectors and industries, investors can get a better idea of the opportunities within U.S. large cap stocks. However, it’s worth noting that it is not possible to invest directly in an index. Investors can put funds in these industries by purchasing stocks directly, or through managed products such as ETFs and mutual funds that track index performance.

By exploring every corner of the economy, investors can take advantage of growth potential in various areas—not just those trending in the news cycle.

Advisor channel footer

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Comments

Markets in a Minute

Explainer: A Visual Introduction to Fed Tapering

Broadly speaking, Fed tapering is the reversal of quantitative easing. We show the history of Federal Reserve bond tapering and how it works.

Published

on

Fed Tapering

Explainer: A Visual Introduction to Fed Tapering

View the high resolution version of this graphic. Buy the poster.

The Federal Reserve began tapering its large-scale asset purchases in November 2021, a move likely influenced by:

  • Rising inflation
  • Improving unemployment
  • Strong U.S. GDP growth

More than $4 trillion in capital was injected into the economy through quantitative easing (QE), over the course of the pandemic, inflation is at 40-year highs, and unemployment levels hover below 4%.

As Fed policy responds to a recovering U.S. economy, this Markets in a Minute chart from New York Life Investments shows how Fed tapering works, and its impact on the economy.

How Fed Tapering Works

Fed tapering is the unwinding of the Federal Reserve’s large-scale asset purchases.

After the 2008 financial crisis, large scale asset purchases were introduced for the first time to inject liquidity into the market and help restore confidence. During the pandemic, they were introduced once more, at a rate of $120 billion per month.

Here’s how it works:

  1. The U.S. central bank buys government bonds typically in the form of Treasuries and mortgage-backed securities (MBS).
  2. This influx of demand leads to a rise in these bond prices and their yields (interest rates) fall.
  3. As this lowers the interest rate on the government bonds, what often follows is lower interest rates on loans for households and businesses.
  4. Lower rates stimulate spending.
  5. When the economy is running well, the bank may unwind asset purchases to help keep inflation low, otherwise known as Fed tapering.
  6. Notably, Fed tapering and QE is hotly debated among economists. Those in favor say QE is a critical tool for stimulating the economy. Those against say that it inflates asset prices and contributes to inequality.

    Inflation Levels

    The consumer price index (CPI) rose 7% in December, the highest rise since 1982.
    Fed Tapering

    Given this increase, Lawrence Summers, former U.S. Treasury Secretary and Jason Furman, former chief economist for President Obama say that the Fed didn’t taper soon enough. Other financial heavyweights suggest this is just the beginning of a hawkish approach to inflation.

    So how does Fed tapering impact inflation?

    By tapering asset purchases, the amount of money circulating in the economy that can be used to borrow to buy a house or car is reduced. According to this theory, when there is less spending, inflation will gradually cool down.

    Fed Tapering and Interest Rates

    The Federal Reserve has outlined that it will taper asset purchases before it increases targets on short-term interest rates. By current estimates, interest rates could rise in March.

    However, if the pandemic takes a turn for the worse, the Federal Reserve can shift direction. This gives the Fed time to assess how the market and economy will react before it raises rates.

    To prevent the taper tantrum of 2013, which led to market volatility and U.S. dollar appreciation, Federal Reserve chair Jerome Powell has stated that the Fed must carefully communicate the sequence of QE and tapering to prevent any fear in the market.

    When Doves Cry

    Like the 1940s, the rise in money growth over the pandemic has been driven by government deficits. By contrast, leading up to the 2008 Global Financial Crisis or during the 1950s and 60s, the private sector spurred loan growth.

    Monetary inflation can impact consumer prices and financial asset inflation.

    As CPI and financial markets have soared over the pandemic, investors will be watching closely to see how Fed tapering impacts future monetary policy.

    Advisor channel footer

    Thank you!
    Given email address is already subscribed, thank you!
    Please provide a valid email address.
    Please complete the CAPTCHA.
    Oops. Something went wrong. Please try again later.

Continue Reading

Markets in a Minute

Ranked: Real Estate Returns by Property Sector (2012-2021)

From residential to retail, are there patterns in real estate return on investment? We rank them by sector over the last decade to find out.

Published

on

This infographic is available as a poster.

Real Estate Return on Investment by Sector

For the ninth year in a row, Americans say real estate is the best long-term investment.

However, what might be less clear to the average investor are the different types of investments available within the real estate sector, and how they compare. Real estate return on investment within property sectors has historically been uneven, and 2021 was no exception. While residential property soared, office real estate has performed relatively poorly.

Are there any patterns in the top performers over time?

This Markets in a Minute from New York Life Investments ranks real estate return on investment by sector over the last decade.

Sector Returns Over Time

We used data from the National Association of Real Estate Investment Trusts to show real estate return on investment by year. A real estate investment trust is a company that owns, operates, or finances income-producing real estate.

Here’s how total returns stack up by property sector, sorted from highest to lowest return in 2021.

 2012201320142015201620172018201920202021
Self Storage19.9%9.5%31.4%40.7%-8.1%3.7%2.9%13.7%12.9%57.6%
Residential6.9%-5.4%40.0%17.1%4.5%6.6%3.1%30.9%-10.7%45.8%
Industrial31.3%7.4%21.0%2.6%30.7%20.6%-2.5%48.7%12.2%45.4%
Retail26.7%1.9%27.6%4.6%1.0%-4.8%-5.0%10.7%-25.2%41.9%
Diversified12.2%4.3%27.2%-0.5%10.3%-0.1%-12.5%24.1%-21.8%20.5%
Infrastructure29.9%4.8%20.2%3.7%10.0%35.4%7.0%42.0%7.3%18.6%
Timber37.1%7.9%8.6%-7.0%8.3%21.9%-32.0%42.0%10.3%16.4%
Mortgage19.9%-2.0%17.9%-8.9%22.9%19.8%-2.5%21.3%-18.8%14.7%
Office14.2%5.6%25.9%0.3%13.2%5.3%-14.5%31.4%-18.4%13.4%
Healthcare20.4%-7.1%33.3%-7.3%6.4%0.9%7.6%21.2%-9.9%7.7%
Lodging/Resorts12.5%27.2%32.5%-24.4%24.3%7.2%-12.8%15.7%-23.6%6.3%

Data for 2021 is as of November 30. Specialty and data center sectors are excluded as this data was only available from 2015 onwards.

Self Storage real estate was the best performing sector for the last two years, and also performed well during the 2015 market correction. It tends to perform well when people’s lives are disrupted, such as when they’re moving for a new job, schooling, or due to marriage or divorce. In the case of COVID-19, self storage got an extra boost from people wanting more space in their home amid remote work.

Timber and Industrial real estate have been in the top three performing sectors for at least half of the last decade. Industrial real estate, a category including properties that enable the production, storage, and distribution of goods, has seen increased demand due to the rise of e-commerce. One estimate says the U.S. could require an extra billion square feet of warehouse space by 2025.

On the other hand, the Lodging/Resort sector has frequently been one of the bottom performers. A form of discretionary spending, hotel stays may be one of the first expenses people cut when the economy is in a downturn. This weakness was compounded by lockdown restrictions during the COVID-19 pandemic.

What is a Good Return on Investment in Real Estate?

In light of the above data, investors may be wondering which sectors are “the best” to invest in.

The short answer: it depends. Here’s how real estate return on investment has varied within sectors, using the minimum, median, and maximum returns. We’ve sorted the data from the highest to lowest standard deviation, a measure of risk.

Real Estate Return on Investment

While Timber and Self Storage have delivered strong returns, they have also been relatively risky, with some of the widest variations in returns.

Industrials have seen the highest median return, and their risk is about middle of the pack. The second highest median return goes to the Mortgage sector, which earns income from the interest on mortgages and mortgage-backed securities. The mortgage sector has seen less risk than most other real estate categories, at least in the last decade.

For investors with a lower risk tolerance, Infrastructure may be a sector to consider. These properties had a positive return on investment for all of the last 10 years, and had the lowest risk of any property sector.

Patterns Within Real Estate Return on Investment

By looking at historical patterns, investors can consider how economic conditions may affect real estate return on investment.

Sectors associated with discretionary spending, such as Retail and Lodging, have tended to perform poorly during downturns. On the other hand, Self Storage and Residential properties have historically been more resilient during the 2015 selloff and the COVID-19 pandemic.

Future trends may also offer food for thought. For example, as the population ages and the government puts an increased focus on critical facilities, could the Healthcare and Infrastructure sectors be poised for growth?

Whichever sector(s) an investor focuses in on, real estate serves as an alternative investment that can help diversify any portfolio.

Advisor channel footer

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
New York Life Investments

Subscribe

Are you a financial advisor?

Subscribe here to get every update, including when new charts or infographics go live:

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular