Thoughts in Charts: The Large 5 vs. the Other 495

A few large companies are making a big impact during the “stay at home economy.” Investors are flocking to Facebook, Amazon, Apple, Microsoft and Google: these names collectively make up 20% of the S&P 5001. Goldman Sachs reported that, as of mid-June, these 5 names were up about 23% year to date2.

Part of the reason that their large weight and outperformance matters is because the S&P 500 is an asset weighted index where the larger company returns contribute more to the index overall return than smaller companies. As you can see, the S&P 500 index return would be 5% lower if you removed these 5 large companies from the composite.

1 Langley, Karen. “The Big U.S. Stock Indexes Are Telling Different Stories.” The Wall Street Journal, 23 June 2020. WSJ.com, https://www.wsj.com/articles/the-big-u-s-stock-indexes-are-telling-different-stories-11592904600?mod=searchresults&page=1&pos=19.

2 Borodovsky, Lev. “The Daily Shot.” The Wall Street Journal, 24 June 2020. Blogs.WSJ.com, https://blogs.wsj.com/dailyshot/2020/06/24/the-daily-shot-new-starter-homes-made-a-comeback-in-may/?guid=BL-278B-2189&mod=searchresults&page=1&pos=4&dsk=y

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