Like many other stock-market indexes, the Barron’s 400 Index is setting records this spring. But it is doing so in its own unique way.
That’s because the Barron’s 400 doesn’t look like other indexes. Its component stocks are from companies that MarketGrader has analyzed as being among the financially strongest in the country. As a result, the sector makeup of the Barron’s 400 doesn’t match those of the S&P 500, the Russell 3000 and the Dow Jones Total Stock Market Index.
Here is how the current sector weights in the Barron’s 400 compare to those of the Dow Jones U.S. Total Stock Market Index, a benchmark that includes all the U.S. exchange-listed stocks:
|Sector||Barron’s 400||DJ U.S. TSM|
Only health care and materials are in alignment between the two indexes. Among the others, the Barron’s 400 is comparatively heavier in three and lighter in five. These differences have a direct effect on performance.
For example, “defensive” stocks have been important contributors to the broad market rally this year. But they chipped in a little less than 16% of the Barron’s 400 return through May 10. By contrast, stocks in the cyclical consumer discretionary sector—the heaviest in the index—contributed 40% of the advance.
The following table shows how much each of the 10 biggest sectors added to the Barron’s 400 gain of 16.33% this year through May 10. The sectors are listed in descending order of weight, like in the first table.
Bottom line: The Barron’s 400 has been setting its records with stocks that were not leading the broad-market rally for much of this year. Cyclical stocks recently have taken market leadership, but the Barron’s 400 was there first.