The S&P 500 index has delivered an average annual return of 10.5% since it was established in 1957, but it's on track for a far better gain of 18% in 2025. Although the index is made up of 500 companies from 11 different economic sectors, a small group of technology giants are fueling its above-average returns.
The iShares Core S&P 500 ETF (IVV 1.54%) is a low-cost exchange-traded fund (ETF) that tracks the performance of the S&P 500 by owning the same stocks and maintaining similar weightings. Should investors buy it heading into 2026, even though the index is at an all-time high? History offers a clear answer.
Image source: Getty Images.
The ideal ETF for investors of all experience levels
The S&P 500 is weighted by market capitalization, meaning larger companies represent a higher percentage of its portfolio than smaller companies. That's why, despite the existence of 11 sectors, the information technology sector has a significant weighting of 34.5% on its own. It's home to three of the world's largest companies: Nvidia, Microsoft, and Apple, which have a combined value of $12.2 trillion.
In addition to Nvidia, the information technology sector is home to practically every other major semiconductor stock, including Broadcom, Advanced Micro Devices, and Micron Technology. These companies supply the critical chips and components required to develop artificial intelligence, so they are at the heart of one of the most valuable technological revolutions in history.
But the S&P 500 isn't all about tech. Below are its next five biggest sectors by weighting, along with some of their most noteworthy constituents:
|
S&P 500 Sector |
Sector Weighting |
Noteworthy Stocks |
|---|---|---|
|
Financials |
13.44% |
Berkshire Hathaway, JPMorgan Chase, Visa |
|
Consumer discretionary |
10.55% |
Amazon, Tesla, Nike |
|
Communication dervices |
10.50% |
Alphabet, Meta Platforms, Netflix |
|
Healthcare |
9.52% |
Eli Lilly, Johnson & Johnson, UnitedHealth Group |
|
Industrials |
8.18% |
GE Aerospace, Caterpillar, Boeing |
Data source: State Street. Sector weightings are accurate as of Dec. 23, 2025, and are subject to change.
The remaining five sectors in the S&P 500 are consumer staples, energy, utilities, materials, and real estate. Simply put, the index is highly diversified despite being relatively top-heavy right now because of the tech sector.
Investing in the iShares Core S&P 500 ETF is a great way to invest in the index. It has an expense ratio of just 0.03%, meaning an investment of $10,000 will incur an annual fee of just $3. It matches the expense ratio of the Vanguard S&P 500 ETF, which is the fund many experts recommend when investors are looking for an ultra-low-cost option.
History suggests there is rarely a bad time to invest
Volatility is a normal part of the investing journey. According to Capital Group, the S&P 500 experiences a 5% sell-off once per year, on average, and declines of at least 10% typically come around every two-and-a-half years. Bear markets, which are defined by peak-to-trough declines of 20% or more, are less common, but still happen every six years or so.
NYSEMKT: IVV
Key Data Points
With all of that said, the compound annual return of 10.5% in the S&P 500 dating back to 1957 includes every sell-off, correction, and even bear market along the way. Therefore, the secret to success is to stay the course even during the most concerning periods in the market. Remember, over the last 25 years alone, the index bounced back from events like the dot-com crash, the global financial crisis, and the COVID-19 pandemic.
In summary, investors should feel confident buying the iShares Core S&P 500 ETF heading into 2026, even with the S&P 500 at an all-time high. However, the index isn't cheap right now, so maintaining a long-term horizon of at least five years is as important as ever. It might be worth starting with a small position in the ETF and adding to it consistently each month.
