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Is the S&P 500 Imbalanced?

From the desk of Dan Seder, CFA, CMT, CFP®

Do you know what your index fund owns? A common misconception is that the S&P 500 equally represents the largest companies in America. The following pie chart should be a stark reminder of how unbalanced the S&P 500 has become in recent years. When we originally discovered this chart almost two years ago (the original of which was posted by Michael Batnick), the same five companies combined were larger than the S&P 500’s smallest 282 companies combined. Today, the largest 5 companies represent over $5.5 trillion in combined value. It would now take the smallest 348 companies in the S&P 500 (combined) to achieve an equivalent value. The big keep on getting bigger.