This ETF Holds Several Of The World's Largest Companies

No, that headline does not reference S&P 500 tracking exchange-traded funds, which, of course, hold plenty of the world's largest companies. Thanks to ballooning market values for some of the sector's biggest names coupled with declines in the financial services group, the technology sector is the S&P 500 largest constituent at a weight of about 20.4 percent.

As of February 1, five of the S&P 500's 10 largest members were technology companies. Accounting for the two classes of Google parent Alphabet Inc GOOG GOOGL shares found in that lineup, the four tech companies among the nine largest S&P 500 companies is double the next closest sector, that being financial services.

Technology SPDR ETF

All of that means the Technology SPDR (ETF) XLK, the largest technology ETF by assets, is home to plenty of the world's largest companies as measured by market capitalization. Just 16 members of the S&P 500 meet the definition of mega-cap, with market values north of $200 billion and five are technology stocks, according to Finviz data.

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Those stocks include Apple Inc. AAPL, Alphabet, Facebook Inc FB and Microsoft Corporation MSFT. Those stocks combine for 42 percent of XLK's weight.

“U.S. firms have been moving up the megacap ladder at an accelerated pace since Apple first eclipsed Exxon Mobil Corp. as the largest company in 2011. In dollar terms, American companies now occupy the top 10 spots, with technology accounting for half of them,” according to Bloomberg.

With the technology sector trading inline on valuation with the S&P 500 or just below the benchmark U.S. equity index, there is some value here. That is especially true when considering compound annual growth rate for XLK components' earnings of 10.3 percent since 2010, according to AltaVista.

Although Alphabet and Facebook have recently been climbing the market cap ladder, XLK's 75 holdings have seen their weighted average market value fall to $256.5 billion as of February 1 from $2,854 billion about 60 days ago.

Much of that decline is on the back of Apple, XLK's largest individual holding at a weigh of 13.4 percent. Shares of Apple have tumbled 23 percent over the past 90 days,