The S&P 500 is the most famous stock index in the world. So much so that when people refer to the US stock market, they’re usually 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.
Key takeaways
The S&P 500 index is made up of just over 500 of the biggest and best US companies.
You can invest in individual companies or a “fund” that tracks the S&P (see best performers).
Watch out for any ongoing fees, usually referred to as “TER” – aim for as little as possible.
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S&P 500 ETFs
One of the best ways to invest in the S&P 500 index from the UK is with an exchange-traded fund (ETF). These let you invest in all 500 stocks in a single investment. Here are the best-performing ETFs.
Note: We’ve added a link next to each of these funds, which takes you to a share trading app where you can sign up to invest in that S&P 500 fund.
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.
The table above 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.
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How to invest in the S&P 500 UK
If you want to invest in the S&P 500 index, the best option is to use an index fund or an ETF that mirrors the index, here are some simple steps to follow to get started:
Find an S&P 500 index fund or ETF.We have some examples of S&P 500 funds at the top of this page as well as information on how to choose an S&P 500 index fund.
Open a share dealing 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.
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.
Buy the S&P 500 fund.Once your money has been deposited, you can then buy your chosen S&P 500 index fund. You’ll generally pay a small annual fee to invest in an ETF or index fund.
The whole process can take as little as 15 minutes. You’ll need a smartphone or computer, an internet connection, your passport or driving licence and a means of payment.
S&P 500 performance chart
Which S&P 500 fund is best?
S&P 500 funds tend to be some of the most popular options for UK and investors, and also some of the best-performing ETFs over long periods of time. Rather than looking at slight discrepancies in performance, you’re better off looking for the cheapest S&P 500 index fund or ETF available on your chosen trading 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.
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 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 S&P 500 includes the “Magnificent Seven”, which is a group of seven gargantuan tech companies like Apple, which on their own make up of the S&P 500 (by market cap).
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.
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.
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:
Mirroring. 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 pretty closely.
Fees. It’s usually best to compare funds based on the ongoing fees, 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..
Performance. While the performance of 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, some will avoid this by calling it something like the “US 500” fund.
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 do companies make it onto the index?
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:
There are 2 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 can be very time consuming and expensive.
The preferable option, which saves you time and money, is to invest in an S&P 500 fund (like an ETF). Essentially, someone else does the above for you and all you have to do is choose one to invest in. But, if you don’t want to invest in a fund then you can buy individual S&P 500 stocks, here’s how:
Find an investing platform. You’ll need one that lets you invest in US stocks – the providers in our picks above let you buy US shares.
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.
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.
Choose how much you want to invest or how many shares you want. The platform should tell you how much this will cost you.
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 use an index fund or invest in an ETF that tracks the performance of the S&P 500.
Which is better: DCA vs lump sum investing in the S&P 500?
When deciding how to actually invest in the S&P 500, two popular strategies are dollar-cost averaging (DCA) and lump sum investing. Each has benefits and drawbacks, and you might also refer to DCA as “pound-cost averaging” if you’re buying a fund denominated in pound sterling.
S&P 500 lump sum investing
Involves investing all your available money into the S&P 500 in one big lump.
Historical data suggests lump sums tend to outperform DCA over the long term.
It allows your money to be exposed to potential growth sooner, giving compound returns more time to work.
Carries the risk of investing just before a downturn, which can be psychologically difficult if the value drops immediately after.
S&P 500 DCA investing
Involves spreading your investment deposits over time (perhaps weekly or monthly).
Reduces the risk of bad market timing by smoothing out your entry points.
Can be easier emotionally, since you’re less likely to regret “buying at the top”.
The trade-off is that, on average, you may miss out on gains if markets trend upward during your phased buying period.
What are the main sectors covered by the S&P 500?
Here are the top sectors that currently make up the bulk of the S&P 500 in terms of weighted exposure:
Information technology
Healthcare
Financials
Consumer discretionary
Communication services
Industrials
Consumer staples
Energy
Utilities
Real estate
Materials
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). If you buy an S&P 500 fund that’s denominated in pounds, you won’t have to pay an FX fee. And if you use a 0% commission platform, you won’t have to pay a trading costs either.
But if you want to buy indiviual stocks in the S&P 500, here are some of the costs of buying US stocks with major brokers:
Platform
Fee for a US trade
Foreign exchange fee
eToro
£0
0.75%
Freetrade
£0
0.99%
Hargreaves Lansdown
£6.95
1%
XTB
£0
0.5%
IG
£0
0.5%
Lightyear
£0
0.1%
Trading 212
£0
0.15%
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.
Our expert says: Expert comment: Is the S&P 500 index overpriced?
"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. "
Investing in the index provides a degree of automatic diversification
You can invest with ETFs and funds
By tracking an index rather than actively picking stocks, you can invest passively which is often cheaper
Cons
Not completely diversified — it only includes US stocks
Foreign exchange (FX) fees might apply if you buy individual S&P 500 stocks
Market cap weighting means most of your investment goes to the top stocks
You get no control over the investments in an S&P 500 fund
Bottom line
Home to Nvidia, 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 decenture to the US stock market with a single investment, but remember to think about how this fits in with the rest of your portfolio.
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.
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.
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).
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.
Sources
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To make sure you get accurate and helpful information, this guide has been edited by
Liz Edwards
as part of our
fact-checking process.
George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers.
He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active.
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In a nutshell, an index fund is a low-cost portfolio of shares and other assets that tracks a financial or stock market index. They’re a popular investment choice in the UK and worldwide.
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