Many investors think of the S&P 500 as a U.S. index. They’re right, it does track U.S. companies, but where do those companies make their cash?
Market watch took a look at where each component of the index generates its revenue. With help from Standard & Poors, they determined that, for the third year in a row, revenue from the U.S. has declined as a percentage of total revenue for S&P 500 companies.
“According to data compiled by S&P Dow Jones Indices for MarketWatch, S&P 500 companies generated 52.2% of their revenue in the U.S. in 2014. That’s down from 53.7% in 2013 and 53.4% in 2012.”
For the year 2014, revenue from within the U.S. was only 52.2% of total revenue. While there is no indication for how 2015 is shaping up, the trend has come far enough that it is unlikely to vary significantly.
This is relevant to investors who have traditionally sought out funds that invest exclusively in international companies or exclusively in U.S. companies. The reality is that owning a fund that tracks the components of the S&P 500 is still giving you exposure to the global economy.