The 50 most valuable companies in the benchmark, which now make up about 56% of its total weight, moved up or down on average nine places this year, tied for the most since at least 2013 and almost double in 2019. And that volatility comes even as the median valuation gap between each company in the top 50 has more than doubled to $7 billion since 2013.
It suggests that as the S&P 500's top-heavy skew worsens, there's increasing competition for investor funds in the rest of the index.
The much-discussed concentration risk at the very top — Apple is now nearly worth more than France's entire stock market — means investors are increasingly reliant on a shrinking number of companies for returns.
The top 10 companies by value are now worth as much as the bottom 415. In 2013, that number was 294.
«This is what happens when your best players put up the most points,» Todd Sohn, ETF strategist at Strategas Securities, said in an interview.
«They do what they're supposed to do and then you gotta make sure the bench — the rest of the index — is holding up their end of the bargain, otherwise, that's when you get real big problems.»
The rankings volatility can also be partly attributed to Covid-19, Sohn said, as the pandemic abruptly changed business models and therefore company valuations.
Among the companies that joined the top 50 this year are several that seized on opportunities created by the pandemic including Salesforce Inc., Advanced Micro Devices Inc., Intel Corp., Intuit Inc., Boeing Co., Netflix Inc. and Qualcomm Inc.
Most Valuable Player: Nvidia
Nvidia is the first company in at least 20 years to start a year outside the S&P 500's top 10 and rise to finish among the top five.