Which S&P 500 index fund is best?
One of the best ways to invest in the S&P 500 from the UK is by investing in an index fund or ETF (exchange-traded fund). These funds are designed to replicate the performance of the S&P 500, typically by investing in the individual stocks that make up the index, with a manager or software that rebalances it whenever the index changes. With these funds, you’d only need to make one investment and you get access to the whole index.
Below, you’ll find our best S&P 500 funds based on their annual performance. We’ve summarised the process of below.
Best S&P 500 ETFs
| Icon | Fund | 5-year performance | 1-year performance (to June 2023) | Link to invest |
|---|---|---|---|---|
 | Vanguard S&P 500 (VUSA) | 86.77% | 8.75% | Invest with IGCapital at risk |
 | iShares Core S&P 500 (CSP1) | 88.47% | 8.80% | Invest with FreetradeCapital at risk |
 | Invesco S&P 500 (SPXP) | 88.91% | 9.50% | Invest with FreetradeCapital at risk |
 | HSBC S&P 500 (HSPX) | 87.01% | 9.09% | Invest with FreetradeCapital at risk |
 | SPDR S&P 500 ETF (SPY) | 86.50% | 8.75% | Invest with eToroCapital at risk |
 | Xtrackers S&P 500 Swap (XSPX) | 88.90% | 8.93% | Invest with CMC InvestCapital 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 invest in the S&P 500 from the UK
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. Here’s how to do it:
- 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
- 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 .
- 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 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.
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.
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. It’s home to some recognisable brands, including many technology stocks, such as Apple and Netflix.
The largest 10 stocks in the index make up 24% of it, and the top 4 are all technology stocks: Microsoft, Amazon, Apple and NVIDIA.
The companies in the index are hand-picked by the US Index Committee. It includes market leaders in 11 sectors:
- 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.
Latest updates
Our experts keep on top of the markets to bring you the latest on what's shaking up stock prices.
18 July 2023: The US flagship S&P 500 index has continued its positive momentum, rising by close to 2.5% in the past week, driven higher by tech stocks and a relatively positive outlook for this earnings season.
28 June 2023: After a rocky end to last week, the S&P 500 index has regained some ground, rising by over 1% and edging back towards all-time highs.
26 June 2023: After quite a positive few weeks, the S&P 500 index dropped by about 2% last week, with a 0.8% drop to close out the Friday. This will potentially give the bulls a scare as the index had been edging into positive territory.
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, such as a mutual or exchange-traded fund (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).
Best for
ETFs
Best for
Beginners
Best for
0% commission
Best for
Index funds
To choose the best investment app for each category, our experts analysed 83 different metrics for the investment platforms we've reviewed on our site. We've hand-picked the metrics we think are important for each category to help us find the best in 17 categories among our high-scoring partners. There are also "promoted" picks on some pages. They're based on factors that include special features or offers and the commission we receive. It's important to compare the full range of platforms available and keep in mind our picks may not always be the best fit for you.
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 is 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.
- 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.
- 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 invest with an index fund or ETF that tracks the performance of the S&P 500.
Two in three people (67%) in our poll were planning to buy stocks and shares
Finder survey of 2,000 people, May 2020
Download investment statistics PDF
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What stocks are in the S&P 500?
The S&P 500 comprises 500 leading US companies, which means it includes some of the most recognisable and popular stocks in the world. These include the following:
- Alphabet (GOOG)
- Amazon (AMZN)
- American Express (AXP)
- Apple (AAPL)
- eBay (EBAY)
- Meta Platforms (FB)
- JPMorgan Chase (JPM)
- McDonald’s (MCD)
- Microsoft (MSFT)
- Netflix (NFLX)
- Nike (NKE)
- NVIDIA (NVDA)
- Royal Caribbean Cruises (RCL)
- Tesla (TSLA)
- Berkshire Hathaway (BRK.B)
- Walt Disney Company (DIS)
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 on the London Stock Exchange (LSE), you’ll be limiting your options. 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 internationally 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 (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:
| 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.
How did the S&P 500 perform in 2022?
Finder’s investment expert Zoe Stabler answers
Global stock markets took a battering in 2022, and the S&P 500 was no exception. We saw the start of a stock market decline in January, which hugely escalated at the announcement of Russia’s invasion of Ukraine, as Russia is a major supplier of energy worldwide. Fears of disruption to energy supplies and the looming recession made 2022 a bear market for the S&P 500 and most other stock market indices.
The S&P 500’s 2022 peak was on January 3 when it closed at 4,796. Prior to 2022, the S&P 500 had an average annual compounded return of 7.5%. Since 2009 and up to 2022, the index was profitable every year apart from 2018, and in 2020, despite the coronavirus pandemic, it grew by 16.11%.
How does the S&P 500 compare to the Fortune 500 by market sector?
Goliath vs Goliath. We dug into past data from the S&P 500 index and the Fortune 500 to see what categories of stocks have reigned supreme over the last few decades, and what the trends and patterns can tell us, as investors.
Where the S&P 500 contains the largest US stocks by market cap, the Fortune 500 is the largest by revenue. Our deep dive showed oil stocks reigned during the ‘80s by both measures. But from the ‘90s, top stock sectors start to evolve.
There’s still overlap during these years, but what’s clear is that somewhat unfashionable categories, such as automotive and telecoms, remain massive cash generators. This was the case even as investing sentiment shifted to areas like healthcare, beverages, and a tech takeover of the S&P 500.
The last decade-plus of heavy tech weighting in the S&P looks similar to oil during the 80s. One key difference is that oil was also the biggest revenue generator. Whereas tech revenues have never topped the Fortune 500. And as our chart shows, every empire eventually falls eventually.
One area that’s been a front-runner for both market cap and revenue is healthcare. We all witnessed tech’s recent fall from grace during the end of 2021 and during 2022. Since healthcare tops the revenue charts and plenty of firms are integrating technology into the business, perhaps this is a category to watch closely over the next decade.
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
- You can invest with ETFs and funds
- By tracking an index rather than actively picking individual stocks, you’ve diversified to an extent and may be shielded from some volatility
Cons
- Not completely diversified — it only includes US stocks
- Foreign exchange (FX) fees will apply
- Market cap weighting means most of your investment goes to the top stocks
Bottom line
Home to Disney, Amazon, Apple and Tesla, the S&P 500 is made up of some of the largest US 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 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 be a foreign exchange (FX) or currency exchange fee on top of any commission.
Compare S&P 500 trading platforms
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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.
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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.
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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.
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Yes, there are companies in the S&P 500 that pay dividends. Some examples include Walmart, McDonalds and Coca-Cola.
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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. The coronavirus stock market crash is an example of when this happened. The S&P have recovered a lot since then.
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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