The Evolving Landscape of the S&P 500

The S&P 500 has long been the benchmark for U.S. equity exposure, reflecting the performance of America’s largest publicly traded companies since its inception in 1957. Over the years, its composition has naturally evolved alongside market trends and industry shifts.

One of the most significant shifts in recent history has been the growing dominance of the technology sector. Advances in cloud computing, artificial intelligence, software, and semiconductors have propelled tech stocks to unprecedented heights, reshaping the index in ways few anticipated.

Today, only a handful of companies hold a commanding presence in the S&P 500. As of January 31, 2025, the top 10 holdings in the S&P 500 accounted for 36.2%[1] of the index’s total weight, and of that, the so-called “Magnificent 7” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta), accounted for 30.6%[2]. In practical terms, this means that more than a third of an S&P 500 index fund is concentrated in just 10 companies, most of which belong to the technology or tech-adjacent sectors such as communication services (Alphabet and Meta) and consumer discretionary (Amazon, Tesla).

While these companies have been strong performers, investors relying solely on the S&P 500 for their U.S. equity exposure can be subject to high concentration risk. Those concerned about such risk could consider bolstering their portfolio with added diversification and growth potential from two compelling Hamilton ETFs:

• HAMILTON CHAMPIONS™ U.S. Dividend Index ETF (SMVP)
• HAMILTON CHAMPIONS™ Enhanced U.S. Dividend Index ETF (SWIN)

Diversification and Growth with SMVP & SWIN

Investors don’t need to abandon the S&P 500 or technology stocks entirely. Instead, they can complement their core holdings with exposure to high-quality companies outside the tech-dominated index. One effective way to do this is by investing in companies with a strong history of dividend growth as this can serve as a proxy for identifying high-quality businesses.

The Solactive United States Dividend Elite Champions Index, tracked by SMVP and SWIN, includes U.S. companies with at least 25 years of dividend increases and no dividend cuts. This equal-weighted index offers:

• A diversified sector allocation, including only 6.4% exposure to technology as of January 31, 2025
• Established companies with an average market cap of $169 billion
• Historically similar total returns to the S&P 500, but with lower volatility, reduced drawdowns, faster recoveries, and a higher dividend yield

HAMILTON CHAMPIONS™ U.S. Dividend Index ETF (SMVP)

• 0% management fee through January 31, 2026[3]
• Equal-weight portfolio of blue-chip U.S. companies with a long history of stable and increasing dividend payments
• Lower volatility vs. S&P 500 with similar long-term performance[4]
• 100% CAD-hedged

HAMILTON CHAMPIONS™ Enhanced U.S. Dividend Index ETF (SWIN)

• Modest 25% leverage to enhance long-term growth potential and yield
• Equal-weight portfolio of blue-chip U.S. companies with a long history of stable and increasing dividend payments
• Lower volatility vs. S&P 500 with similar long-term performance[5]
• 100% CAD-hedged

HAMILTON CHAMPIONS™ — Built to Win

Investors looking for a more balanced approach to U.S. equities don’t need to abandon the S&P 500 or technology stocks. Instead, SMVP and SWIN can complement core holdings by providing exposure to high-quality, dividend growing companies while reducing the concentration risk of the Magnificent 7 found in S&P 500 ETFs.

By diversifying beyond the S&P 500’s tech-heavy concentration, investors can construct a more balanced, resilient portfolio for long-term success.

To learn more about our HAMILTON CHAMPIONS™ suite of ETFs, check out our HAMILTON CHAMPIONS™ Dividend Growth Playbook.

 

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A word on trading liquidity for ETFs …

Hamilton ETFs are highly liquid ETFs that can be purchased and sold easily. ETFs are as liquid as their underlying holdings and the underlying holdings trade millions of shares each day.

How does that work? When ETF investors are buying (or selling) in the market, they may transact with another ETF investor or a market maker for the ETF. At all times, even if daily volume appears low, there is a market maker – typically a large bank-owned investment dealer – willing to fill the other side of the ETF order (at net asset value plus a spread). The market maker then subscribes to create or redeem units in the ETF from the ETF manager (e.g., Hamilton ETFs), who purchases or sells the underlying holdings for the ETF.

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Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. Indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and does not take into account sales, redemptions, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Only the returns for periods of one year or greater are annualized returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated.

Certain statements contained in this website may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.

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[1] Source: Bloomberg, as at January 31, 2025
[2] Source: Bloomberg, as at January 31, 2025
[3] Annual management fee rebated by 0.19% to an effective management fee of 0.00% at least until January 31, 2026.
[4] Based on total return of the Solactive United States Dividend Elite Champions Index vs. S&P 500 Index. Since November 1, 2006, as at January 31, 2025. Source: Bloomberg, Solactive AG, Hamilton ETFs.
[5] Based on the total return of 1.25x leveraged exposure to the Solactive United States Dividend Elite Champions Index (SDLUSCT) vs. S&P 500 Index. Since November 1, 2006, as at January 31, 2025.