Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

What is the S&P 500 index and how can I invest in it from South Africa?

Here are the quickest and easiest ways to invest in one of the world's most popular stock indices.

You often hear it talked about in the news but few take the time to explain what the S&P 500 is or why it matters. We explain the basics and how you can invest in it from South Africa.

Standard & Poor’s 500, best known as the S&P 500, is a stock market index that tracks the performance of the 500 largest US companies listed on the stock exchange. It’s a key indicator because it’s used as a benchmark for the performance of the broader US stock market.

So if you see the S&P 500 index rise or drop significantly on any given day, you’ll know it’s probably because of a major event that’s impacting thousands of US corporations and even the economy.


How to invest in the S&P 500 from South Africa

There are a number of ways you can invest in the S&P 500 from South Africa. As it’s a collection of 500 companies, so you can either buy stocks in these companies or you could invest in an S&P500 index fund.

Another approach is to trade the S&P 500 via contracts for difference (CFDs), a derivatives product that allows you speculate on index price movements. This is very different to index fund investing as it’s much riskier and you’re using leverage to amplify profits and losses.

It’s all a little vague, but when you hear of someone “trading the S&P500” in South Africa, they’re most likely referring to CFD trading. “Investing in the S&P 500 index” on the other hand is associated more with index funds.

It’s important to understand that all of these approaches vary significantly in terms of risk.

As a general rule, investing in a single company is riskier than investing in an index fund, while index CFD trading is much riskier still and should only be attempted by experienced traders.

How to find an S&P 500 index fund

Index funds can be either listed on a stock exchange as exchange traded funds (ETFs) or as unlisted funds. There are very few differences between unlisted funds and ETFs and many fund managers such as Vanguard and Blackrock offer investors both options.

If you’re new to investing, ETFs can be easier to access because you can invest in them through any regular share trading platform. ETFs also have a lower minimal investment requirement of a few hundred dollars rather than a few thousand dollars for unlisted funds.

To help get you started, here’s a list of S&P500 ETFs in South Africa to date:

  • Satrix S&P 500 ETF: (STX500J)
  • Satrix Quality South Africa ETF: (STXQUA)
  • Satrix MSCI World ETF: (STXWDM)
  • CoreShares Top50 ETF: (CTOP50)
  • Sygnia Itrix SWIX 40 ETF: (SYGSW4)

How to invest in an S&P 500 ETF

  1. Find an S&P 500 index fund. Some 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. Some are actively managed while others do little more than track the index. Do your research before deciding which is best for you.
  2. Open a share trading account. In order to invest in an S&P 500 ETF, you’ll need to open a trading account with a broker or platform.
  3. Deposit funds. You’ll need to deposit funds into your account to begin trading.
  4. Buy the index fund. Once your money has been deposited, you can then buy units in the S&P 500 index fund, the same as you would buy stocks. You’ll generally pay a small annual fee (called the MER fee) to the ETF fund manager taken out of your returns.

How to invest in S&P 500 stocks

An alternative way of investing in the S&P 500 is to buy individual stocks in the 500 companies listed in the index. You could choose to buy shares in select companies or all 500 of them if you wanted it.

However, buying shares in hundreds of companies is a very expensive method of investing as you typically need to pay brokerage fees on every trade you make. Some of the stocks in the S&P 500 are also valued in the hundreds of dollars, so you’d need to invest hundreds of thousands of rands 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 buy an S&P 500 ETF or index fund.

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:

Compare S&P 500 trading platforms

Name Product Number of Stocks CFDs Shares Available Markets
eToro
2,000+
Yes
Yes
Worldwide with exception.
CFD Service. Your capital is at risk.
Get commission-free US stock trading plus access to forex, cryptocurrencies, ETFs, and commodities with the world’s leading social trading and investment platform.
Plus500
2,000+
Yes
No
Worldwide with exception.
CFD Service. Your capital is at risk.
Trade over 2,500 financial instruments with one of the largest CFD providers in the world.
Prime XBT
Access to global markets
No
Yes
US, IN, ES, JP, AU, UK, CN, DE, CA, CH, MX, NZ, CH, HK, FR
CFD Service. Your capital is at risk.
Trade cryptocurrencies and traditional financial instruments such as commodities, indices, and forex across 50+ markets.
Zacks Trade
Access to global markets
No
Yes
US, CA, MX, AUT, BEL, FR, DE, IT, NL, ES, NO, SE, UK, CH, HK, JP, SG, RU, AU
CFD Service. Your capital is at risk.
Trade stocks, bonds, ETFs, options, and more on 90+ international exchanges. Offers customizable trading platforms with over 120 technical indicators for your charting needs.
Eightcap
Access to global markets
Yes
No
UK, DE, AU
CFD Service. Your capital is at risk.
Trade a wide variety of instruments on the award-winning MT4/5 platforms with this Australia-based CFD and forex broker.
Firstrade
Access to US stocks
No
Yes
US
CFD Service. Your capital is at risk.
Enjoy $0 commission trading for stocks, options, funds, and more with this internationally-acclaimed discount broker.
CM Trading
N/A
Yes
No
US, FR, DE, UK, AU, ZA, CH. HK, JP, ES, NL, IT
CFD Service. Your capital is at risk.
Licensed international brokerage and CFD provider that offers advanced trading solutions designed for both new and experienced traders alike.
Exness
N/A
Yes
No
CH, VN, TH, PH, SG, ID, IN, UAE, ZA, SA, EG, BR, CR, MX
CFD Service. Your capital is at risk.
Enjoy fast trade executions at competitive fees with this award-winning retail forex broker.
Interactive Brokers
Access to global markets
No
Yes
US, MX, RU, ES, UK, DE, IL, HK, SG, IN, KR, AU, CH, HU, CA
CFD Service. Your capital is at risk.
Take advantage of low trading fees, multiple platform support, and an extensive list of asset classes across global markets, including stocks, options, futures, forex, bonds, and funds.
loading

Compare up to 4 providers

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 Johannesburg Stock Exchange (JSE), 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.

Is now a good time to invest in the S&P 500?

Like most stock indices, the S&P 500 has seen significant drops in 2020 as a result of the coronavirus pandemic. While those who invested in the S&P 500 at the start of the year will have lost money, many investors will see the recent crash as a good opportunity to buy S&P 500 stocks or funds.

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.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, 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 CFDs and 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.

More guides on Finder

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy Policy and Terms.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site