Standard & Poor’s has historically grouped its S&P 500® Index into ten sectors according to their Global Industry Classification Standard (GICS). Below, we look at changes in the sector weights within the S&P 500® Index over the past two decades to see how they reflect changes in the U.S. economy (real estate investment trusts were broken out of the financial sector last year, but we have kept them in for the purposes of this study).
While 20 years is not a long time by historical standards, the picture illustrates a tale of the diminishing weight of telecommunications as data becomes free, the rise (in 1999), and subsequent collapse during the dot-com bubble, and recent ascendency of information technology. The combined consumer sectors have remained at a consistent 21-23% weight but the mix has shifted toward consumer discretionary (think experiences) and away from consumer staples (think things). Our quantitative analyst, Paul Kuppinger, CFA, noted that the sector weights have remained largely stable over the past two decades, mostly because changes to an economy the size of the U.S. occur over decades, not years. The picture does give a good visual representation of the changes to the contributors to the U.S. economy and keeps us focused on long-term opportunities across our diversified economy.