Historical S&P 500 Industry Weights – [20+ Year History]

Updated 7/12/2023

If you’re benchmarking to the S&P 500, then it helps to know the context of your industry weighting compared to the index.

It can help to explain your portfolio’s relative performance. It can also create a “heat check” to how your portfolio is balanced, and how it might react to an upcoming economic cycle.

This post will define the 11 sectors in the S&P 500, and historical industry data by weighting:

Let’s dive in.

Defining Stock Market Sectors

Before evaluating the historical industry weights for the S&P 500, let’s define the sectors by relation to the economic (super) cycle.

Today, these categories aren’t always concretely standardized. That said, we can look at the way many financial websites report industries and sectors.

key takeaways about stock market sectors

Some examples of the industries (sectors) as I see them on most financial websites (like Finviz) are:

  • Basic Materials
  • Consumer Cyclical / Consumer Discretionary
  • Communication Services
  • Technology / Information Technology (IT)
  • Financial / Financial Services
  • Consumer Defensive / Non-cyclical
  • Real Estate
  • Energy
  • Industrials
  • Healthcare
  • Utilities

Keep in mind these categorizations aren’t always 100% accurate, or representative, of companies.

A company can be a conglomerate and have business segments which sell to multiple end markets in different industries.

Or a company’s product and service could technically be defined as two different things. A good example is Google, a “Communication Services” company due to its advertising business. You could argue it’s a technology company too.

Cyclical vs Non-Cyclical Industries: Basics

It’s also key to define cyclical and non-cyclical, and how that can affect investment results. In general, cyclical or non-cyclical stocks perform in the following ways:

Cyclical stocks: Perform strongly during strong economic growth, and poorly during economic contractions.

Non-cyclical stocks: Perform pretty consistently regardless of broader macroeconomic conditions.

An easy way to understand cyclical vs non-cyclical stocks and industries is with a utility company. No matter what’s going on with the economy, people need electricity. They will generally make those payments to their electric company even if they’re unemployed. This makes electric utilities non-cyclical.

On the flip side, a technology company like Apple will probably sell less iPhones if many people are unemployed. Since the latest model isn’t a “need to have” for most people, Apple sales tend to be more discretionary and cyclical.

The Tough Problem of Defining Cyclical vs Non-Cyclical Industries

Like with industry categorizations, businesses are exposed to economic cycles in varying degrees. It isn’t always black or white.

Defining the cyclicality of industries (outside of Consumer Discretionary / Consumer Cyclical) is less universal, though this categorization from Morningstar is a good general representation (Cyclical, Defensive, Sensitive):

  • Cyclical
    • Basic Materials
    • Consumer Cyclical
    • Financial Services
    • Real Estate
  • Defensive
    • Consumer Defensive
    • Healthcare
    • Utilities
  • Sensitive
    • Communication Services
    • Energy
    • Industrials
    • Technology

A gut check on these definitions makes sense too.

An industry like Communications might see higher demand during economic expansion– if many people upgrade to 5G because of high consumer confidence– but also have a floor against economic recessions (people still need their cell phones). So it makes sense to put that industry in the gray area of “sensitive” to the cycle.

S&P 500 Industry Weights and Sector Structures

Now let’s take a recent snapshot of the S&P 500 and its industry weights and apply them to the “Morningstar Stock Sector Structure.”

To make this calculation, I used a recent list of current S&P 500 constituents and their sectors, and their latest market capitalization (July 12, 2023).

It’s not a perfect measurement, as some companies are added and dropped from the S&P 500 index quite frequently, and the industry classifications might vary.

But like Warren Buffett says, “it’s better to be approximately right rather than precisely wrong.” So that’s what we’ll go with for the S&P 500 industry weights highlighted in this article.

SECTORJuly 202320132003MEDIAN
Communication Services9%38%5%15%
Consumer Discretionary11%6%6%7%
Consumer Staples7%7%12%8%
Health Care13%9%15%12%
Information Technology27%11%17%16%
Real Estate2%2%1%2%
Grand Total100%100%100%100%

A few takeaways from this chart.

(I used 2013 and 2003 as representative of recent bear markets and over a span of different decades).

It appears that Communication Services and Consumer Discretionary are in a secular growth trend, while Financials and Industrials are in secular decline.

Technology (Information Technology), while agreed by many to also be participating in secular growth, appears to be more cyclical in nature. This could be market-driven or economic-driven.

I was surprised to see Energy higher in 2010 (9%) than in 2000 (6%) even though it’s so much lower today (4%). The Energy weighting could become a cycle that swings up and down rather than sits in a permanent down trend.

Historical S&P 500 Industry Weights and Sector Structures

Next I want to take the same approach but zoom out over many years. This will give us insight into how industry weights can change from year to year. It can also give a baseline expectation for how to position a portfolio over the very long term.

Because of my 35+ year time horizon, I’d rather base my industry weights decisions on how the S&P 500 has looked over the very long term — not how it looks now, or looked last year.

This gives me a better shot at matching my performance close to the index over the very long term. And it gives me a baseline (again) to measure how cyclically I want to try and weight my portfolio as I add positions.

Again, this dataset doesn’t take into account historical S&P 500 additions and removals through the years, and is backwards looking. But it provides a decent representation of the overall picture.

Communication Services9%8%15%14%14%13%13%13%13%10%38%33%33%32%35%26%34%27%26%16%5%5%
Consumer Discretionary11%9%13%13%10%10%10%9%10%9%6%6%6%6%5%4%4%5%5%7%6%5%
Consumer Staples7%8%6%7%8%8%9%10%10%10%7%8%9%8%8%10%7%8%8%10%12%13%
Health Care13%15%13%12%13%14%12%12%14%14%9%8%8%8%9%10%9%9%10%12%15%15%
Information Technology27%23%25%26%23%22%19%17%16%16%11%14%13%12%12%13%10%11%11%13%17%16%
Real Estate2%3%3%2%3%3%3%3%3%3%2%2%2%2%1%1%1%2%1%1%1%1%

Important: looking at S&P 500 industry weights is not meant to be a substitute to individual stock analysis. It should not guide investment decisions.

At the end of the day… Your portfolio performance will depend on the long term financial performance of the companies you own. That matters much more so than any industry weighting decisions will.

Still, I find that at times there can be lots of attractive stocks to investigate. At times like these, it can be helpful to examine S&P 500 industry weights to identify a sector to focus on. Or, prevent over-exposure to any economic factor, which would effectively reduce my margin of safety (a 100% cyclical portfolio would lead to a very bumpy ride).

Andrew Sather

Andrew has always believed that average investors have so much potential to build wealth, through the power of patience, a long-term mindset, and compound interest.

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