What is a S&P500?

500 major publicly listed firms in the US are included in the Standard & Poor’s 500 Index, a market capitalization-weighted index. Since the index incorporates additional factors in addition to market capitalization, it is not an accurate ranking of the top 500 US corporations by market value. Still, the S&P 500 index is considered one of the greatest indicators of the success of significant American stocks and the stock market.

S&P500 – Key Highlights

Listed below are the key highlights of the index:

• Market capitalizations of firms in the S&P are weighted according to how many shares they have available for public trading, making it a “float-weighted” index.
• The S&P 500 is generally regarded as one of the greatest measures of significant U.S. companies and even the overall equities market because of its breadth and variety.
• An index like the S&P 500 does not allow for direct investment, but several funds utilize it as a benchmark and keep track of its composition and results.
• S&P 500 Live charts show the live status of the indexes.
• The S&P 500 Futures contract, commonly known as E-mini, is traded on the Globex electronic trading platform of the Chicago Mercantile Exchange.
• Based on the S&P 500 stock index, the S&P 500 Futures contract is traded.
• Compared to the S&P 500 stock index, one contract is worth 50 times as much. Full-sized S&P 500 futures contracts in.10 increments.

Construction of the S&P 500 Index

The S&P 500 consists of 500 corporate entities across 11 different sectors such as IT, FMCG, Consultancy, and so on. The S&P alone covers more than 80% of the total market capitalization of the United States Stock Exchanges alone. In a nutshell, S&P 500 Index is the most traded index around the globe. Approximately, not less than 10 Trillion Dollars is benchmarked to this S&P 500 Index Fund, out of which Indexed Assets comprise more than $3 Trillion.

According to a report, In the year 2018, more than forty percent of the S&P 500 Constituents were sold in Foreign Countries. The S&P 500 Index usually consists of large-cap companies and has a negligible amount of correlation with the Indian Equity Markets. Sector-wise Information Technology, Healthcare Services, and Communication Services are the top 3 in the S&P 500 Index.

TOP S&P 500 INDEX FUNDS

• The Fidelity 500 Index Funds – The Fidelity 500 Index Fund was born on 4th May 2011 and has a Dividend Yield percentage of 1.44%. The most fascinating thing about the Fidelity Index Fund is the lack of a huge amount of Investment. It currently has $366 Billion worth of Assets under control.
• The Schwab S&P 500 Index Funds – The Schwab S&P 500 Index Funds formed on May 19.,1997 have a dividend yield ratio of 1.34% and have more than 60 Billion Dollars of assets under its management. The Schwab S&P 500 boasts of a $0 Minimum Investment for all its account types.

CRASH OF THE S&P 500 INDEX FUNDS

TECH BUBBLE – In the year 2000, the infamous Tech Bubble Burst happened, which saw the stocks in the Technology Sector suffer a massive hit. The S&P 500 Index Funds also were down but less than the NASDAQ. Eventually, the S&P 500 Index Funds recovered.

THE GREAT RECESSION – The Great Recession in the year 2009 still haunts many of the S&P 500 Fund Holders as every sector suffered from it. In March 2009, the S&P 500 Index Funds touched an all-time low since World War II. 

End Note:

The S&P 500 index is generally considered the finest single measure of large-cap U.S. stocks. According to our Annual Survey of Assets, about 5.4 trillion dollars’ worth of assets are indexed. That’s about one-third of the projected $13.5 trillion in indexed or benchmarked assets (Dec. 31, 2020). About 80% of the market value is represented by the index, consisting of the 500 largest firms.