How to invest in the S&P 500 in the UK

The S&P 500 is the most famous stock index in the world. So much so, when people refer to the US stock market, they’re talking about this index. It’s a mammoth collection of some of the best companies in the world and it’s now easier than ever to invest in the S&P 500 from the UK.

Best S&P 500 ETFs

One of the best ways to invest in the S&P 500 index from the UK is by using an exchange-traded fund (ETF). These funds let you invest in all the stocks within the index in a single investment.

The table below shows the best-performing S&P 500 ETFs available right now. There’s only slight changes in performance which largely comes down to when each ETF updates the stocks. All S&P 500 ETFs should contain an almost identical selection of stocks.

Icon	Fund	5-year performance	1-year performance (to December 2023)	Link to invest
	Xtrackers S&P 500 Swap (XSPX)	82.02%	10.33%	Invest with XTBCapital at risk
	Invesco S&P 500 (SPXP)	81.84%	10.19%	Invest with XTBCapital at risk
	iShares Core S&P 500 (CSP1)	80.24%	10.26%	Invest with eToroCapital at risk
	Vanguard S&P 500 (VUSA)	80.13%	10.20%	Invest with XTBCapital at risk
	SPDR S&P 500 ETF (SPX5)	79.84%	10.17%	Invest with IGCapital at risk
	HSBC S&P 500 (HSPX)	79.29%	9.70%	Invest with IGCapital at risk

Which S&P 500 fund is best?

Rather than looking at slight discrepancies in performance, you’re better off looking for the cheapest S&P 500 ETF or index available on your chosen investing platform.

Because these funds are all copying the same index, there’s no reason you should pay higher fees. Cheap is often best when it comes to investing in passive S&P 500 tracker-funds. S&P 500 funds are passively managed (rather than actively managed), so you don’t get any added benefit by using a specific brand or fund.

It’s also going to be worthwhile ensuring your share dealing account charges low (or no) commission for investing in the S&P 500 through a fund.

How to choose an S&P 500 index fund

Some S&P 500 index funds and ETFs 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 S&P 500 fund, you’re not necessarily looking for the one that performs best. Each one aims to match the performance of the S&P 500 index, so they should all mirror the performance of the index.

As S&P 500 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 or ETF, 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 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 funds shouldn’t diverge too much, there are some that have performed slightly better than others over time. Also, investment companies need to pay royalties to have “S&P” in the title of its fund, so some will avoid this by calling it something like the “US 500” fund.

What is the S&P 500?

The S&P 500 (Standard and Poor’s 500) is an index made up of 500 leading public companies in the US. The Standard and Poor’s (S&P) name comes from the merger of 2 financial data companies: Poor’s Publishing and the Standard Statistics Company.

The index contains some of the most recognisable companies in the world and when people talk about the “US stock market” they’re often referring to the S&P 500 because this has become a key measure of the US economy and gives a snapshot into its overall health.

The companies in the index are hand-picked by the US Index Committee. Contrary to popular belief, it’s not just the 500 biggest US stocks. 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 $12.7 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.

• Energy
• Materials
• Industrials
• Consumer discretionary
• Consumer staples
• Healthcare
• Financials
• Information technology
• Communication
• Real estate
• Utilities

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.

The Standard and Poor’s (S&P) name comes from the merger of 2 financial data companies: Poor’s Publishing and the Standard Statistics Company. S&P created an index compiled of 90 companies, later expanding it to 500.

Can I invest in the S&P 500 from the UK?

Yes! There are several ways you can invest in the S&P 500 from the UK. You can buy stocks in the companies that make up the S&P 500 or buy an index fund, mutual fund or ETF that tracks the overall performance of the S&P 500 index.

Platforms where you can invest in the S&P 500

These trading apps allow you to invest in S&P 500 stocks directly, companies or invest in and S&P 500 funds (like an ETF).

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What S&P 500 funds can I buy in the UK?

There are more than 100 S&P 500 index funds and ETFs 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.

What is the UK equivalent of the S&P 500?

The S&P 500 tracks the performance of 500 leading companies on US stock exchanges, and it’s the most popular US stock index. The equivalent of the S&P 500 in the UK is the FTSE 100, which 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.

How to invest in S&P 500 stocks

If you don’t want to invest in a fund then you can buy individual S&P 500 stocks.

1. Find a stock broker. You’ll need one that lets you invest in US stocks – the providers in our comparison table below let you buy US shares.
2. Sign up and fund your account. You’ll need to provide some personal details and information about how you’ll fund your account. If you’re buying US stocks you may also need to fill out a W-8BEN form.
3. Find a stock you want to invest in. Research some of the shares you’re interested in and find it on your chosen platform. We’ve listed some of the largest stocks on the index below.
4. Choose how much you want to invest or how many shares you want. The platform should tell you how much this will cost you.
5. Hit buy. It’s as easy as that!

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 share 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 an index fund or ETF that tracks the performance of the S&P 500.

What stocks are in the S&P 500?

We’re not going to bore you by listing all 500 stocks in the S&P 500. Instead, here are the current top 10 S&P 500 stocks by market cap (as of November 2023). With most S&P 500 funds, the bulk of your investment will go to these top holdings:

• Apple (AAPL)
• Microsoft (MSFT)
• Amazon (AMZN)
• NVIDIA (NVDA)
• Alphabet Class A (GOOGL)
• Tesla (TSLA)
• eBay (EBAY)
• Meta Platforms (META)
• Berkshire Hathaway (BRK.B)
• Exon Mobil (XOM)
• UnitedHealth Group (UNH)

Why should I invest in the S&P 500?

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. It’s one of the best (and simplest) ways to get exposure to the US economy as an investor.

If you only invest in stocks on the London Stock Exchange (LSE), you’ll be limiting your options. Investing in an S&P 500 index fund or accessing the US stock market to invest in stocks listed on the S&P 500 will help to diversify your portfolio internationally.

How much does it cost to invest in the S&P 500?

There are a couple of fees to keep in mind if you plan to invest in US stocks – the commission fee (the cost of carrying out the trade), and the foreign exchange or FX fee (which is the cost of changing your money over to US dollar). Here are some of the costs of buying US stocks with major brokers:

Expert comment: Is the S&P 500 index overpriced?

George Sweeney

Finder Money Expert

The S&P 500 contains plenty of growth-oriented companies that tend to trade at higher multiples than other stocks. So many analysts who compare the S&P 500 to something like the FTSE 100 will tell you that the S&P 500 index is overvalued and will likely fall to a more reasonable level. This makes sense. The problem is that analysts have been saying this for years.

Although the flagship index from the US tends to see greater volatility and bigger falls when things turn sour, it’s also proven over long periods that it can make back lost ground (and then some), leaving other international markets in its dust. Unless the US becomes less important to the global economy, paying a premium to invest in many of its best stocks sounds reasonable.

Pros and cons of investing in the S&P 500

Bottom line

Home to Disney, Amazon, Apple, Tesla, and much more – the S&P 500 is made up of top US companies. It’s understandable why investors want to get a piece of the action. Take some time to consider how you want to invest – are there specific S&P 500 stocks you want to buy, 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 likely be a foreign exchange (FX) fee on top of any commission. If you buy an S&P 500 fund or ETF in GBP denomination, you can avoid this. Investing in the S&P 500 is a decent way to get exposure to the US stock market with a single investment, but remember to think about how this fits in with the rest of your portfolio.

• What is the difference between S&P 500 and Vanguard 500?

  The Vanguard 500 is an index fund that tracks the S&P 500 – this means that you can invest in the Vanguard 500 as a way of attempting to receive the same returns as the S&P 500.

• Should I put all my money in the S&P 500?

  You should ideally diversify your portfolio – which essentially means that you should invest in a variety of different types of investments that cover a variety of different industries and countries. If you invest solely in the S&P 500, you’ll only have US stocks, and may not have a range of different types of investment.

• Does the S&P 500 pay dividends?

  Yes, there are companies in the S&P 500 that pay dividends. Some examples include Walmart, McDonalds and Coca-Cola. If you invest in a fund, you can choose to have any dividends paid out to you (distribution) or have any dividends rolled back in to your fund (accumulation).

• Will the S&P 500 crash?

  The S&P 500 is often thought to reflect the stock market as a whole, this means that in times of economic stress, it might crash. There have been multiple crashes throughout history, but the S&P 500 has always come back stronger, it’s mostly a matter of time and patience.
The best way is probably by using a cheap, passive ETF or index fund that tracks the performance of the S&P 500 index. This is an affordable and simple way to invest in the S&P 500.

Expert comment: Instacart IPO

Finder investing expert, George Sweeney, comments

Instacart had a strong start to trading, with the share price breaking the $40 mark, thanks to the recent success of Arm's IPO, with investor sentiment beginning to turn from sour to sweet after a long IPO drought.

This valuation could still provide a bargain investment opportunity, considering that Instacart was valued at $39bn back in 2021 just a couple of years ago. So, the market could be valuing Instacart at its cheapest, compared to something like Deliveroo, which was valued at $10bn (possibly its peak), before tumbling to a valuation 5 times smaller than it was at its IPO.

Instacart has managed to capture over 50% of America's online grocery delivery market share. While plenty of companies and apps focus on takeaways, online grocery delivery is a larger overall market in the US. Analysts predict Instacart could swallow up even more of this market if it continues to grow.

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Comparing 5 major indices

The Nikkei 225 is the best performing index of 2023 so far.

The Hang Seng is the worst performing index of 2023, having a lower value than the start of 2023 since the 3rd of May (market day 83).

The FTSE 100 has been around the same value as the start of 2023 for most of the year.

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