The FTSE 250 and S&P 500 are both stock market indices that track stocks on an exchange or in a country. The S&P 500 tracks 500 that trade on US exchanges as chosen by a committee. The FTSE 250 tracks the 101-350 biggest stocks on the London Stock Exchange (LSE) by market capitalization.
What’s the difference between the FTSE 250 and the S&P 500?
The S&P 500 and the FTSE 250 are stock market indices (plural of index) that track the performance of a group of stocks on specific exchanges. All FTSE 250 stocks trade on the the London Stock Exchange. All S&P 500 stocks trade or the New York Stock Exchange (NYSE), Nasdaq or Chicago Board Options Exchange (Cboe).
S&P 500 stocks are hand-picked by the US Index Committee, which picks leaders companies in 11 sectors.
FTSE 250 stocks must have a premium listing of equity shares (subject to stricter regulations) on the main market of the LSE and must have a minimum free float of 10% (UK incorporated) or 25% (non-UK incorporated). The biggest 100 stocks on the LSE by market capitalization are tracked by the FTSE 100, and the next 250 biggest stocks are tracked by the FTSE 250.
The S&P 500 is made up of 500 stocks, while the FTSE 250 tracks just 250 stocks. The overall market capitalization of the S&P 500 is significantly higher than that of the FTSE 250, because many companies in the FTSE 250 are smaller. The market cap of the S&P 500 is around $36.7 trillion USD (roughly $48.91 trillion CAD), compared with the market cap of the FTSE 250, which is £419 billion (roughly $662.47 billion CAD).
FTSE 250 vs S&P 500: Which is worth more?
The S&P 500 is worth more than 70X the value of the FTSE 250. It holds 2X the number of stocks.
FTSE 250 vs S&P 500: Which is more diversified?
The S&P 500 has a better diversified set of stocks. It tracks a lot of technology stocks, making up around 15% of the index, but it’s well spread across a number of sectors. The FTSE 250 tracks a number of financial companies and a small number of health care, utilities and communication stocks.
If you’re looking for diversification, consider investing in both indices. This gives you additional global exposure.
Platforms that let you invest in US and international stocks
These trading apps allow you to invest in companies within the indices or funds/ETFs that hold stocks in FTSE 250 and S&P 500 companies.
The S&P 500 has performed better historically, but that doesn’t mean that it’s going to do well in the future. But why choose? Investing in both the FTSE 250 and the S&P 500 would give you diversification across lots of sectors as well as let you invest in lots of different-sized companies across the globe.
If you do wish to choose between them, choose one that’s got exposure to the types of stocks you’re interested in – the FTSE 250 has a lot of defensive stocks, like consumer staples and financial services, while the S&P 500 has a lot of technology, industrial and healthcare stocks.
What are the top stocks in the FTSE 250 and S&P 500?
FTSE 250
S&P 500
Centrica
Apple
Tritax
Microsoft
Unite Group
Amazon
Harbour Energy
Meta Platforms (formerly Facebook)
Convatec
Alphabet Inc A (Google)
How to invest in the FTSE 250 and S&P 500
Find an S&P 500 or FTSE 250 ETF or mutual fund. Some index funds track the performance of all stocks on the index, whereas others only track a certain number of stocks or are weighted towards specific stocks. You should select the fund that best suits your investment goals.
Open a stock trading account. To invest in ETFs or mutual funds, you’ll need to open a trading account with a broker or trading platform. Keep in mind that some index funds may only be available on certain brokerages or platforms. The providers in our comparison table let you invest in Canadian and international stocks. Some of the index funds above are listed on the Toronto Stock Exchange (TSX).
Deposit funds. You’ll need to deposit funds into your account to begin trading. You may need to pay a foreign conversion fee to convert your Canadian dollars into US dollars, so you can buy US stocks.
Buy the index fund. Once your money has been deposited, you can buy the index fund. Most ETFs or index funds come with a small annual fee to cover fund management expenses.
Bottom line
The FTSE 250 and the S&P 500 are popular stock market indices that track stocks in the US and UK. You can model your portfolio after either index by investing in a fund that holds the same, or similar, stocks as those listed in the index. Doing so will diversify your holdings across lots of sectors and investment types.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
Zoe was a senior writer at Finder specialising in investment and banking, and during this time, she joined the Women in FinTech Powerlist 2022. She is currently a senior money writer at Be Clever With Your Cash. Zoe has a BA in English literature and a Diploma for Financial Advisers. She has several years of experience in writing about all things personal finance. Zoe has a particular love for spreadsheets, having also worked as a management accountant. In her spare time, you’ll find Zoe skating at her local ice rink.
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