What is the S&P 500?
The Standard and Poor's 500 (S&P 500) is an index that tracks the stock performance of the top 500 US companies listed on stock exchanges in the United States. Household names like Apple, NVIDIA, Microsoft, Amazon, Alphabet (i.e. Google), Meta, Tesla and Berkshire Hathaway head the list.
It first launched in 1957 and has since returned an average of 10% per year making it an attractive option for passive investors with a longer-term investment outlook.
To be included in the S&P 500, companies must meet certain criteria. This includes:
- being US-based
- having a market cap of at least $15.8bn
- having positive earnings in the most recent quarter (and the four quarters prior to that)
- offering the majority of their outstanding shares for public trading
- having their initial public offering (IPO) at least a year prior to joining
The S&P 500 comprises 11 broad sectors with the largest ones being technology, health care, and financials. The remaining sectors include real estate, energy, materials, consumer discretionary, industrials, utilities, consumer staples and communications.
Investors seeking diversification and exposure to the US market may be interested in investing in the S&P 500. Below, we explain how to do this from the UK and what your options are as an investor.
Can you invest in the S&P 500 in the UK?
You can invest in the S&P 500 from the UK. It has returned roughly 10% year on year since its inception in 1957.
As it is an index of shares, you can't invest in it directly, but you can invest in an index fund which tracks the performance of the S&P 500. Index funds are passive in nature as they mimic the index aiming to recreate its performance rather than beat it.
Buying individual shares that make up the index is theoretically possible too, but this would be a costly endeavour as you need to account for paying fees for individual trades as well as foreign exchange fees and other taxes that may be associated with purchasing US stocks. You would also need to monitor the index to ensure you're holding the exact stocks that make up the S&P 500. As there are 500 companies that make up the index, this simply isn't practical.
A far easy way and cost-effective way to invest in the S&P 500's from the UK is to tracker its performance by investing via a S&P 500 tracker fund (often a unit trust) or an ETF. There is also scope to invest in specific sectors within the S&P 500 by purchasing S&P 500 funds that focus on a specific industry. For example, some S&P 500 funds or ETFs available in the UK are just comprised of companies from a particular sector within the S&P 500, such as the technology or energy sector. These funds don't invest in the entire S&P 500 but rather in specific parts of it.
How to invest in the S&P 500 from the UK
To invest in the S&P 500 from the UK, you will need to:
- Choose an S&P 500 tracker fund or ETF that fits your needs - Most S&P 500 tracker funds and ETFs aim to replicate the index's performance as close as possible and therefore one of the biggest considerations when choosing a S&P 500 tracker is costs. As these trackers all track the same index (the S&P 500) it is important to not pay more than you need to as they essentially are doing the same thing.
- Open a share dealing account via an investment platform - Choose an investment platform that offers S&P 500 tracker funds or S&P 500 ETFs; you'll also need to look at factors like how much the platform costs as well as whether you're happy with the minimum required investment. The platform fees are paid on top of the charges applied by the tracker fund or ETF itself.
- Choose a GIA, ISA, or SIPP to hold your investments - You'll need to find a platform that offers the type of account you want to open (i.e. General Investment Account, ISA, or SIPP); ideally, if you haven't maxed out your ISA allowance, it's generally advantageous to use an ISA for tax efficiency. Tax rules are however subject to individual status and may be subject to change.
- Decide how much you want to invest - The minimum suggested timeframe for investing is five years, as this allows you to potentially ride out any dips in the stock market before you need to access your money. However, timeframes of 10 years or more are generally suggested for equity investments.
- Set up a regular monthly investment or make a one-off deposit - Most platforms allow you to invest little and often through regular investments (by direct debit) which means you don't need to have a big lump sum to get started.
How to choose an S&P 500 fund
S&P 500 funds aim to replicate the index as closely as possible and are typically managed passively. As such, there shouldn't be much of a difference in the performance of the fund or ETF you select. Therefore, aiming for a low-cost fund could ensure you get the most out of your investments. S&P 500 funds charge some of the lowest fees on the market with some charging as little as 0.03% per year to invest.
Beyond the underlying fund fees, you'll also need to think about the platform fees you'll need to pay. These are the fees you pay to the platform that hosts your share dealing account.
Some of the cheapest S&P 500 funds in the UK
In the table below, we've rounded up some of the cheapest S&P 500 funds in the UK to help you choose the right fund for you.
| Fund name | Ongoing costs each year |
| SPDR S&P 500 UCITS ETF (Acc) | 0.03% |
| Invesco S&P 500 UCITS ETF | 0.05% |
| iShares Core S&P 500 UCITS ETF USD (Acc) | 0.07% |
| Vanguard S&P 500 UCITS ETF (USD) Acc | 0.07% |
| HSBC S&P 500 UCITS ETF USD | 0.09% |
Once you've selected a fund, you'll need to open a share dealing account. We take a look at some of the best investment platforms in the market below to help you narrow down your choices.
Platforms you can use to invest in the S&P 500 from the UK
In the table below, we outline some of the best investing platforms and apps you can use to invest in the S&P 500 from the UK. Some of the platforms only offer one S&P 500 fund, while others offer several choices including S&P 500-themed funds that focus on specific parts of the index. Typically, those that offer more choice also cost more. However, if you're simply interested in investing in a low-cost ETF that tracks the S&P 500, you might not necessarily need lots of choice.
| AJ Bell Dodl* | InvestEngine* | Moneybox | Interactive Investor* | Freetrade* | |
| S&P 500 fund on offer | SPDR500 | 30+ S&P 500-themed ETFs including:
|
Vanguard S&P 500 UCITS ETF | 3,000+ funds including several S&P500 options such as:
|
50+ S&P 500-themed ETFs including:
|
| Platform fees | 0.15% (min. £1 per month) | £0 for DIY investing
0.25% for managed portfolios and LifePlans ETF costs apply |
£1 per month + 0.45% | £4.99 to £11.99 per month for an ISA
£3.99 per trade (regular monthly investing is free) |
£0 to £9.99 per month |
| Minimum investment | £100 initial investment or £25 per month | £100 | £1 | £25 per month | £2 |
| Stocks & Shares ISA | YES | YES | YES | YES | YES |
| General Investment Account (GIA) | YES | YES | YES | YES | YES |
| Self-invested Personal Pension (SIPP) | YES | YES | YES | YES | YES |
| Trustpilot score | 4.6 out of 5.0 | 4.6 out of 5.0 | 4.4 out of 5.0 | 4.7 out of 5.0 | 4.1 out of 5.0 |
The figures in the table are correct as of December 2024. Capital at risk
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Open an InvestEngine account.
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- T&Cs apply, Capital at risk
Tax rules subject to individual status and may change.
What are the pros and cons of the S&P 500?
Below, we outline some of the pros and cons of investing in the S&P 500.
Pros of investing in the S&P 500
- Gain exposure to the US market
- A diversified selection of 500 companies ensures you don't "put all your eggs in one basket"
- Tracker funds are passive and therefore typically low cost
Cons of investing in the S&P 500
- Limited to the American market and 100% invested in equities which makes it volatile
- Leans heavily towards the top 10 biggest players (mostly large-cap tech companies)
- No exposure to small-cap companies (higher risk but lower potential for better returns)
Investing in the S&P 500 from the UK - Frequently Asked Questions
Below, we answer some of the most frequently asked questions about investing in the S&P 500.
What are the top 10 S&P 500 stocks?
The stocks below are the top 10 S&P 500 stocks by index weight. These figures are correct as of December 2024 - the exact company weight and order of stocks may fluctuate over time. If you invest in the S&P 500, approximately 30% of your funds will be invested in these stocks:
- Apple - 7.34%
- NVIDIA - 6.58%
- Microsoft - 6.51%
- Amazon - 4.17%
- Meta (Facebook) - 2.68%
- Tesla - 2.26%
- Alphabet (Google) Class A - 2.19%
- Alphabet (Google) Class C - 1.81%
- Broadcom Inc. - 1.64%
- Berkshire Hathaway - 1.64%
As you can see, the 500 largest companies are not equally distributed by weight within the index. In fact, the bottom 400 companies only account for between 0.01% to 0.18% of the index each.
What is the average return for the S&P 500?
The average S&P 500 return has been approximately 10% annually when not adjusted for inflation since 1957. Adjusted for inflation, the returns are closer to 6% to 7% per year on average.
That said, past performance isn't an indicator of future returns and should not be solely used to make investment decisions. Your capital is at risk even with index funds.
In addition, as with most investments, investing in the S&P 500 is most suitable for those with a mid to long-term outlook. For example, while the S&P rose by approximately 26% in 2023, it dipped by about 18% in 2022 showing that there can be significant swings either way in the short term.
What are some alternatives to the S&P 500 in the UK?
If you're interested in index funds but aren't sure the S&P 500 is quite right for you, there are other options available. These include:
- The FTSE100 - This is the UK's version of the S&P 500 which provides exposure to the top 100 companies in the UK.
- FTSE All-World UCITS - This index fund comprises more than 3,500 large and mid-sized company stocks in developed and emerging markets; if you're looking for diversification, this is an option on the market as it covers companies around the world rather than just a specific region.
- The Russell 3000 - This index tracks the 3,000 largest US companies and it comprises around 96% of the US equity market; if you're looking for exposure to the US market (especially smaller companies) and seeking even more diversification than the S&P 500 could offer, then this could be an option to look into.
In general, index funds offer diversification at a low cost. You can choose to invest broadly in global stocks across many industries or focus on specific regions or specific industries. But, regardless, you'll be investing in a basket of stocks and therefore spreading any potential investment risk associated.
Is the S&P 500 right for me?
Investing in the S&P 500 via a fund or ETF is one of the most popular ways UK investors can gain exposure to the US stock market at low cost. It's a viable option if you're looking for diversification of the equity component of your portfolio as it spreads your assets among 500 of the biggest companies in the US. As such, it's not as high risk as investing in individual stocks or more niche funds, however it is still high risk as it is 100% invested in equities.
That said, some argue that the S&P 500 is too top heavy with around 30% of your holdings being invested in the top 10 largest S&P 500 companies which happen to be mostly within the tech sector. This may not offer enough diversification for all investors. It's worth keeping in mind as well that the S&P 500 limits you to the US. If you want to invest in a broader range of regions, a global index like the FTSE All-World which invests in emerging and developed markets around the world might be a better idea. In addition, you might want to consider investing in other assets too (such as bonds) to help diversify your portfolio and manage investment risk.
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