So I'm looking at iShares, just clicked the first thing I recognized, which was S&P 500, and I start looking at stuff... I'm looking at the list of holdings, and maybe I am reading this wrong, but it seems to say that the ETF has 506 holdings. Is the % value for each company so spread out on ETFs?
Generally weighed by market cap. A huge company like Apple will have a relatively large impact on the value of a cap-weighed index that includes it. http://www.investopedia.com/terms/c/capitalizationweightedindex.asp
Yeah, Apple was the holding with the biggest % on this particular ETF I was looking at on iShares... Definitely makes sense. It's just that I was thinking on doing some reading on the companies, and then I saw that 506 there. No company has more than 4% weight though...
Well it's the S&P 500... so 500 companies. Not sure where the 6 other holdings come from.. possibly some companies have multiple different classes of shares. Most ETFs probably have less holdings but some can have more... there really is no limit. That is kind of the point of having an ETF, it allows you to diversify into different companies (either in the same geographical area, or the same sector etc) with no hassle.
