The S&P 500 stock index tracks the share values of the 500 largest U.S. publicly traded corporations. Standard & Poors divides the 500 stocks into different industry categories including financial stocks. The financial sector includes banks, insurance companies, diversified financial companies and real estate investment trusts, or REITs.
Financial Select Sector
Standard & Poors uses the Global Industry Classification System to identify the industry of specific companies. The stocks in the S&P 500 are divided into nine major industries or sectors. By market value, the financial sector is the second-largest after information technology. The S&P 500 sectors are called Select Sectors when they are mirrored by the Select Sector exchange traded funds, or ETFs.
Financial Sector Stocks
As of November 2010, the financial sector includes 82 of the 500 S&P 500 stocks. The complete list of stocks can be downloaded as a comma separated values, or CSV, file from the Financial Select Sector SPDR Fund holdings web page (see Resources). A CSV file will be automatically opened by Microsoft Excel, showing the financial stocks and their weighting in the index.
Major Financial Companies
The financial select sector index is market capitalization weighted. This means the larger companies have greater weight in the index than smaller companies. In the financial sector, the top 10 stocks make up over 50 percent of the index value. The top 10 stocks in the index are: JP Morgan Chase, Wells Fargo, Berkshire Hathaway, Bank of America, Citigroup, Goldman Sachs, U.S. Bancorp, American Express, Morgan Stanley and Metlife.
The stocks in the financial sector are further divided into eight sub-sectors. The largest sub-sectors are insurance companies and diversified financial service companies making up 25 percent of the financial index each. Next is commercial banks comprising 18 percent of the index. REITs are 9.5 percent and consumer finance is just under 5 percent. Thrifts and mortgage companies and real estate management companies are less than one percent of the S&P financial index.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.