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

We've summed up how to invest in the S&P 500 from the UK and some popular S&P 500 index funds

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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%.

What’s the best S&P 500 index fund?

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.

IconFund5 year growthLink to invest
Vanguard iconVanguard S&P 500 (VUSA)93.62%Invest with IGCapital at risk
iShares iconiShares Core S&P 500 (CSP1)93.7%Invest with IGCapital at risk
Invesco iconInvesco S&P 500 (SPXP)96.98%Invest with FinecoCapital at risk
HSBC iconHSBC S&P 500 (HSPX)95.14%Invest with SaxoCapital at risk
SPDR iconSPDR S&P 500 ETF (SPY)93.36%Invest with eToroCapital at risk
DWS Xtrackers iconXtrackers S&P 500 Swap (XSPX)96.09%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.

How to choose an S&P 500 index fund

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.

What is the S&P 500?

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.

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

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.

How to invest in the S&P 500

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:

  1. Find an S&P 500 index fund or ETF. We have some examples of S&P 500 index funds at the top of this page as well as information on how to choose an S&P 500 index fund.
  2. Open a share-trading account. In order to invest in an S&P 500 fund, you’ll need to open an investment account that offers index funds. Keep in mind that some index funds may only be available on certain brokerages or platforms – we’ve listed some S&P 500 index funds and platforms that offer them above. We’ve also listed some S&P 500 index funds below that are listed on the London Stock Exchange (LSE)
  3. Top up your account. You’ll need to deposit funds into your account to invest. Some platforms charge you deposit fees and you may need to pay a foreign exchange fee in order for your pounds to be converted into US dollars.
  4. Buy the index fund. Once your money has been deposited, you can then buyyour chosen S&P 500 index fund. You’ll generally pay a small annual fee to invest in an ETF or index fund.

Best trading platform for index funds: Saxo

Saxo logo
Finder score
★★★★★
Invest now
Capital at risk
We chose Saxo as our top pick because:
  • You can invest in more than 19,000 stocks, funds and investment trusts.
  • It’s got top-notch (and award-winning) trading platforms.
  • Customer support is available 24 hours a day.

Need to know: Opening a Saxo share dealing account requires a high minimum investment (£500).

Read our review of Saxo.

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

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:

  • iShares Core S&P 500 ETF
  • Vanguard S&P 500 ETF
  • Invesco S&P 500 ETF
  • Xtrackers S&P 500 Swap ETF
  • SDPR S&P 500 ETF
  • HSBC S&P 500 ETF USD
  • Amundi ETF S&P 500 ETF USD
  • Lyxor S&P 500 ETF
  • Fidelity 500 Index Fund (FXAIX)
  • Vanguard 500 Index Investor Share Class (VFINX)
  • Schwab S&P 500 Index Fund (SWPPX)
  • iShares S&P 500 Index Fund (BSPAX)
  • T.Rowe Price Equity Index 500 Fund (PREIX)
  • iShares S&P 500 Growth ETF (IVW)
  • Portfolio Plus S&P 500 ETF (PPLC)
  • Schwab U.S. Large Cap ETF (SCHX)

Platforms where you can invest in the S&P 500

These trading apps allow you to invest in companies within the S&P 500 directly or to invest in S&P 500 funds/ETFs.

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

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.

How to invest in S&P 500 stocks

If you don’t want to invest in an S&P 500 index 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 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.

What stocks are in the S&P 500?

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:

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.

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.

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, 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:

PlatformFee for a US tradeForeign exchange fee
Degiro€0.50 (£0.43) + $0.004 per share0.1%
eToro£00.5%
Freetrade£00.45%
Hargreaves Lansdown£11.951%
IG£100.5%
Stake£00.5%
Trading 212£00.15%
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.

How did the S&P 500 perform in 2021?

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.

Pros and cons of investing in the S&P 500

Pros

  • Access some of the largest US stocks
  • Stocks on the S&P 500 tend to be well known and have performed pretty well on aggregate
  • You can invest with index funds
  • By tracking an index rather than actively picking individual stocks, you’ve diversified to an extent and may be shielded from volatility in specific stocks

Cons

  • Not completely diversified — you should invest in worldwide stocks to diversify your portfolio a bit more
  • Foreign exchange fees will apply

Bottom line

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.

Compare S&P 500 trading platforms

Table: sorted by promoted deals first
Name Product Ratings Finder rating Customer rating Min. initial deposit Price per trade Frequent trader rate Platform fee Offer Link
FREE TRADES
IG Share Dealing
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£250
UK: £8
US: £10
EU: 0.1% (min €10)
UK: £3
US: £0
EU: 0.1% (min €10)
£0
Get 0% commission on US shares when you make 3+ trades in the previous month.

Capital at risk

Platform details
FREE TRADES
eToro Free Stocks
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
$10
£0
N/A
£0

Capital at risk

Platform details
OFFER
Fineco
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£0
UK: £2.95
US: $3.95
EU: €3.95
N/A
£0
Get £500 in trading commissions to use in the first 3 months (T&Cs apply)

Capital at risk

Platform details
Finder Award
OFFER
Freetrade
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£1
£0
-
£0
Receive a free share worth between £3-200. T&Cs apply. The probability is weighted, so more expensive free shares will be rarer. Other charges may apply.

Capital at risk

Platform details
Capital.com
Finder score
★★★★★
★★★★★
Expert analysis
Not yet rated
£20
£0
£0
£0

Capital at risk

Platform details
OFFER
InvestEngine
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£100
£0
N/A
0% - 0.25%
£20 referral bonus. T&Cs apply. Capital at risk.

Capital at risk

Platform details
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Compare up to 4 providers

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.

How does this market crash compare?

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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