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27 September 2022: The pound has hit an all-time low against the US dollar after the UK government passed a string of tax cuts aimed at stimulating the economy. US and UK shares which were sold off on Friday continued their rout and overnight the S&P 500 fell by 1.03%.
One of the best ways to invest in the S&P 500 from the UK is by investing in an index fund. These are designed to replicate the performance of the S&P 500, typically by investing in the individual stocks. You’d only need to make one investment and you get access to the whole index.
Here are some of the best S&P 500 funds according to JustETF. We’ve also summarised the process of how to invest in the S&P 500 below.
| Icon | Fund | 5 year growth | 1 year growth (to August 2022) | Link to invest |
|---|---|---|---|---|
 | Vanguard S&P 500 (VUSA) | 93.62% | 8.62% | Invest with IGCapital at risk |
 | iShares Core S&P 500 (CSP1) | 93.7% | 8.61% | Invest with IGCapital at risk |
 | Invesco S&P 500 (SPXP) | 96.98% | 9.47% | Invest with FinecoCapital at risk |
 | HSBC S&P 500 (HSPX) | 95.14% | 9.08% | Invest with SaxoCapital at risk |
 | SPDR S&P 500 ETF (SPY) | 93.36% | 8.57% | Invest with eToroCapital at risk |
 | Xtrackers S&P 500 Swap (XSPX) | 96.09% | 8.76% | Invest with IGCapital at risk |
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Some S&P 500 index funds track the performance of all 500 S&P stocks, whereas others only track a certain number of stocks or are weighted more towards specific stocks.
When you choose to invest in an index fund, you’re not necessarily looking for the fund that performs best. These aim to have the same performance as the S&P 500, so you want one with similar performance to the index. As S&P 500 index funds all track the same group of stocks, the returns offered by different funds or ETFs should be fairly similar. When deciding on the best S&P 500 index fund, it’s therefore better to compare them based on the fees they charge, which is measured by Total Expense Ratio (TER).
The cheapest S&P 500 index fund is the Invesco S&P 500 UCITS ETF, which has a 0.05% total expense ratio (TER). This means if you invested £1,000, you’d be charged 50p in annual fees each year. This is followed by the iShares Core S&P 500 UCITS ETF and Vanguard S&P 500 UCITS ETF, which both have a 0.07% TER.
While the performance of different S&P 500 index funds shouldn’t diverge too much, there are some S&P 500 funds that have performed slightly better than others over time.
The S&P 500 (Standard and Poor’s 500) is an index of the 500 largest listed companies in the US. It’s home to some recognisable brands, including many technology stocks, such as Twitter and Netflix.
The largest ten stocks in the index make up 21% of it, and the top four are all technology stocks: Microsoft, Amazon, Facebook and Alphabet.
The companies in the index are hand-picked by the U.S. Index Committee. It includes market leaders in 11 sectors:
There’s some basic criteria to allow a company to be eligible to be part of the S&P 500 — it must be a US company, have a market capitalisation of at least USD $11.8 billion, be highly liquid, have a public float of at least 10% of its shares outstanding and its most recent quarterly earnings and the sum of its trailing 4 consecutive quarterly earnings must be positive.
It’s name comes from the company created when Poor’s Publishing and the Standard Statistics Company merged. It created an index compiled of 90 companies, later expanding it to 500.
Yes, there are a number of ways you can invest in the S&P 500 from the UK. The S&P 500 is a stock market index that tracks the performance of 500 leading US companies that are listed on the stock exchange. This means you can’t directly invest in the S&P 500, but can buy stocks in the companies that make up the S&P 500 or buy an index fund, such as a mutual or exchange-traded fund that tracks the overall performance of the S&P 500 index.
There are two main ways to invest in the S&P 500 – the first is to buy shares in all 500 companies at the same weightings as they have in the index, then constantly keep up to date with changes to the index and rebalance your portfolio. This is very time consuming and can cost a lot in trading fees.
Another option, which saves you time and money, is to invest in an S&P 500 index fund. Essentially, someone else does the above for you, all you have to do is choose one to invest in. Here’s how to do it:
Need to know: Opening a Saxo share dealing account requires a high minimum investment (£500).
Read our review of Saxo.
There are more than 100 S&P 500 index funds listed on the London Stock Exchange (LSE) that you can invest in from the UK, and you’ll have access to even more if you have an account with a trading platform or broker that offers direct access to the US stock market.
The most popular S&P 500 index funds in the UK include:
These trading apps allow you to invest in companies within the S&P 500 directly or to invest in S&P 500 funds/ETFs.
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The S&P 500 tracks the performance of 500 of the largest companies on US stock exchanges, and is the most popular US stock index. The equivalent of the S&P 500 in the UK is the FTSE 100, which similarly tracks the performance of the 100 largest companies on the London Stock Exchange.
Like the S&P 500, the FTSE 100 is also used as a general yardstick to measure the relative health and performance of the UK stock market and wider economy.
If you don’t want to invest in an S&P 500 index fund then you can buy individual S&P 500 stocks.
If you choose to invest in all 500 stocks, you’ll find that it’s a very expensive method of investing as you may need to pay trading fees on every single stock you purchase. Some of the stocks in the S&P 500 are also valued in the hundreds of dollars, so you’d need to invest thousands of pounds in order to get exposure to all companies in the index.
If you’re looking to diversify your portfolio by investing in the companies in the S&P 500, it’s likely going to be a lot cheaper and more efficient to invest with the second option. An index fund tracks the performance of the S&P 500.
Finder survey of 2,000 people, May 2020
The S&P 500 comprises 500 of the largest US companies by market capitalisation, which means it includes some of the most recognisable and popular stocks in the world. These include the following:
The S&P 500 features some of the largest and most successful companies in the world and has historically given investors a decent return on their investment.
If you only invest in stocks available on the London Stock Exchange (LSE), you’ll be limited in the number of stocks you can buy. Investing in an S&P 500 index fund or opening a trading account that gives you access to the US stock market will let you diversify your portfolio and open up the potential gains offered by US stocks.
There are a couple of fees to keep in mind if you plan to invest in US stocks – the commission fee, which is the cost of carrying out the trade, and the foreign exchange fee, which is the cost of changing your money over to US dollars. Here are some of the costs of buying US stocks with some of the main providers:
| Platform | Fee for a US trade | Foreign exchange fee |
|---|---|---|
| Degiro | €0.50 (£0.43) + $0.004 per share | 0.1% |
| eToro | £0 | 0.5% |
| Freetrade | £0 | 0.45% |
| Hargreaves Lansdown | £11.95 | 1% |
| IG | £10 | 0.5% |
| Stake | £0 | 0.5% |
| Trading 212 | £0 | 0.15% |
| Fineco | $3.95 (£2.98) | 1% |
The most expensive part of buying US stocks is the foreign exchange fees. Compare the fees for the providers that have the lowest foreign exchange fee, even if they’re not commission free, to work out whether it might work out cheaper to go with another provider.
Like most stock indices, the S&P 500 saw significant volatility in early 2021 as a result of the coronavirus pandemic. However, those who held or bought during the crash saw their investments rise over the next few months, and the S&P 500 reached record highs towards the end of 2021.
Historically, the S&P 500 has had an average annual compounded return of 7.5%. Since 2009, the index has been profitable every year apart from 2018, and in 2020, despite the coronavirus pandemic, it grew by 16.11%. With the pandemic still ongoing in 2022, it remains to be seen how the S&P 500 will fare in 2022.
Home to Disney, Netflix, Twitter and Tesla, the S&P 500 is made up of some of the largest technology companies. It’s understandable why investors want to get a look in! Take some time to consider how you want to invest – are there specific S&P 500 companies that you want to invest in, or are you looking to diversify with an S&P 500 index fund or ETF?
Make sure you consider the costs of investing in US stocks, as there will be a foreign exchange or currency exchange fee on top of any commission.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
In order to put this current market dip into perspective, we are tracking the S&P 500's value every day and comparing it to the worst market crashes of the last 50 years.
The worst market crash of the last 50 years was the financial crisis that lasted between 2007 and 2009. The lowest point came after 351 days of trading, when the market had fallen by 55.5% from the point when the crash first started. When compared to this, the current market dip is currently nowhere near as bad. However it has only been going on for a few months.
When polled in March 2022, 48% of UK investors said they planned to buy the current dip. A further 4% of Brits who don't invest, plan to buy the current market dip as well.
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