The S&P 500 Index
The Standard & Poor’s 500 index, also known as the S&P 500, is one of the most popular indexes used for trading or benchmarking the US equities market.
Traders and fund managers tend to prefer the S&P 500 Index to the Dow Jones because it represents more US shares, particularly the more liquid issues with a market capitalization of above $3 billion.
The index is driven by the prices of the 500 shares that comprise it. To be included, a company must have at least half of its value in shares listed on a US exchange. Because of the way the index is calculated, larger companies will have more influence over its behaviour than smaller ones. Companies that feature on the S&P 500 Index include Apple NASDAQ:AAPL, Microsoft NASDAQ:MSFT, Exxon NYSE:XOM and Johnson & Johnson NYSE:JNJ.
Because the index is spread across 500 companies, the S&P 500 will tend to be less volatile than narrower indexes that are composed of fewer shares. However, a large percentage of it’s weighting is taken up by a small number of large tech stocks, such as Apple, Microsoft, Google, Amazon and Nvidia that dominate performance. This has generally led in recent times to stellar performance of the Index, but investors should be aware that any news or government policy that affects sentiment of these tech stocks may have a significant bearing on its performance.
We have seen in the past that during times of particular crisis, the S&P 500 can exhibit high volatility levels, such as in 2002, when the index lost 23% as a consequence of the dot com crash. Similarly, in 2008, during the financial crisis, it lost over 38% of its value, then bounced back with a 23% gain in 2009.
Still, as a stock market index, the S&P 500 is a lot less volatile than many other markets, including individual shares, currencies and commodities.
The S&P 500 Index features many of the world’s largest and best known brands. For investors that prefer the relative security of owning an index of US shares, rather than individual stocks, the S&P 500 Index is a great way to get exposure to the US equity market.
Investors should be aware that many of the largest tech stocks feature prominently in a range of funds and investment trusts and should be mindful not to over-expose their portfolio to these tech stocks in order to hold an appropriately diversified range of stocks.
The S&P 500 Index has seen significant growth in recent years on the back of the stellar performance of some it’s large tech stocks. However, historically, the Index has provided excellent returns since its inception in 1957, delivering an annualized average return of approximately 10.26%, including reinvested dividends.
Its performance reflects the overall economic growth and corporate profitability in the U.S but investors should be mindful that the index can be subject to significant variability through to economic cycles, inflation, and market timing. But, despite these fluctuations, long-term investments in the S&P 500 have generally yielded positive returns.
The S&P 500 Index is widely available in a range of wrappers, the most popular of which are a future or options contract, an Exchange Traded Fund, or as a Contract for Difference.
You can also explore any number of index-linked investment products that will track the S&P 500. If you’re a UK resident, you’re able to trade the index through a tax-free spread betting broker.
Investors can use Exchange Traded Funds or ETFs to track the performance of the S&P 500 index at a relatively low cost to other types of funds such as managed funds and investment trusts. These ETFs provide cost effective exposure in a portfolio to the performance of the index, with the added benefit of dividends which can either provide an income for investors, or be re-invested into more shares through an accumulation ETF. This means that investors will enjoy the effects of compounding over the longer term.
Invest in the S&P 500 Index with these ETF platforms
| Provider | Deposit | Fees | ISAs | Investment Options |
|---|---|---|---|---|
Interactive Brokers | £1 initial deposit | no platform fee £3 per trade | Stocks & Shares ISAs Junior ISAs | UK Shares Non-UK Shares Funds ETFs |
| £3 / €3 per trade for Western European stocks, with no added spreads, account minimums or platform fees. Pricing on US stocks starts at just USD 0.005 per share. There is a minimum monthly activity fee of £3 | ||||
Charles Stanley Direct | £500 initial deposit £50 monthly minimum | 0.30% platform fee £10 per trade | Stocks & Shares ISAs Junior ISAs | UK Shares Funds ETFs Bonds |
| Minimum charge of £5, maximum of £50 per month for all individual accounts held with Charles Stanley Direct. £10 transaction fee on shares, £4 for funds. £50 of trading credits available every six months from October 2024. | ||||
IG | £500 initial deposit £50 monthly minimum | £96 platform fee £8.00* per trade | Stocks & Shares ISAs | UK Shares Non-UK Shares Funds ETFs Robo Advisor |
| Trade 3+ stocks per month for active trader cost of £3.00 on UK stocks. Clients holding investments will be charged a platform fee of £8 per month which can be offset against a trade over the period. IG's Smart Portfolio's are a low cost option for those who are unsure where to invest their money. | ||||
Hargreaves Lansdown | £100 initial deposit £25 monthly minimum | 0.45% platform fee £11.95* per trade | Stocks & Shares ISAs Junior ISAs Lifetime ISAs | UK Shares Non-UK Shares Funds ETFs Bonds Robo Advisor |
| Trade 10+ stocks per month for active trader cost of £8.95 or 20+ at £5.95. Additional charge of up to £45 per annum on stocks and shares. There's no dealing charge for buying or selling funds but you'll pay a holding fee of up to 0.45% per annum. Ready-made portfolios are available for investors that are unsure where to invest their money for an additional fee. | ||||
To trade the S&P 500 Index using futures, CME Group has an extensive list of products based on the price of the Index. Traders can open a futures enabled trading account with an approved broker (see below) to trade CME Group futures. You can learn how to trade futures on equity Index’s like the S&P 500 by taking this short course which is completely free and takes less than 40 minutes to complete, and there’s loads more free educational courses for futures here too. Once you are ready to trade futures, take a look at the brokers listed below or find a full list of futures brokers here to get you started.
- Read our beginner’s guide to Futures
- Find out more about Options
- Take our free online Equities Indices Trading Course
Trade the FTSE 250 with these Futures Brokers
| Broker | Minimum Deposit | Markets | Products |
|---|---|---|---|
Plus500 | $100 | Commodities Currencies Indices Stocks & Shares | CFDs Futures |
| Plus500 Ltd has a premium listing on the Main Market of the London Stock Exchange since 2018 (symbol: PLUS) and is a constituent of the FTSE 250 index. Also, the UK subsidiary - Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). The broker offers access to CFDs on Commodities, Forex, Stocks, ETFs, Options and Indices; Real Shares (Available in certain EU countries only); and Futures (Available in the US only). This broker has +26 million registered customers across 50 countries. Risk Warning: CFDs are complex instruments and carry a high risk of losing money quickly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money | |||
| Interactive Brokers | $0 | Bonds Commodities Currencies Indices Stocks & Shares | CFDs ETFs FX Futures ISA Stocks & Shares |
| Interactive Brokers is one of the world’s leading futures brokers with the ability to offer direct market access to a range of securities. With previous personal experience of trading with this broker, The Armchair Trader knows that they offer excellent platform stability, an excellent range of markets, and solid customer support | |||
| IG | £0 | Bonds Commodities Currencies Indices Stocks & Shares | CFDs ETFs FX Futures ISA Spread Betting Stocks & Shares |
| Widely recognised as the largest broker of its kind for CFDs and Spreadbetting, IG has now expanded its services to include Equities and ETF trading. Their range of markets is wide reaching while both trading and share dealing costs are low. We really like their Smart Portfolio's which are ideal for inexperienced investors to gain exposure to the markets. Clients will get 4.5% AER variable interest on uninvested GBP balances up to £100,000. With deeper pockets to invest in their services than most brokers, IG's platform suite and trading support tend to lead the way. IG is a good all-rounder for novice through to experienced traders and investors. Risk Warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. | |||
For traders looking for short term exposure to the S&P 500 Index, Contracts for Difference or CFDs can be a useful option to track the index. CFDs provide an opportunity for traders to make trades on a rising or falling index offering flexibility based on the sentiment withn US markets. Traders should be aware that CFDs are leveraged trades which eans that successful trading profits can be magnified, but conversely, so will losses. It is important to get to grips with CFD trading before you commit real money. UK investors may prefer to trade with a spread betting provider where any gains are tax free.
Trade the S&P 500 with these CFD brokers
| Broker | Minimum Deposit | Markets | Products |
|---|---|---|---|
Pepperstone | £0 | Bonds Commodities Currencies Indices Stocks & Shares | CFDs FX Spread Betting |
| With a strong focus on the trading experience, industry leading technology, low costs and award-winning client support, we feel that Pepperstone is a good option for the more established high volume day trader. | |||
FP Markets | $100 | Bonds Commodities Currencies Indices Stocks & Shares | CFDs FX |
| FP Markets is an established ASIC, CySEC FSP and CMA regulated broker. They offer access to the industry leading MetaTrader platforms and provide pricing directly from the market meaning fast execution and transparent pricing. A 24/7 multilingual client support service has won recognition through the highly respected Investment Trends awards. | |||
| Plus500 | $100 | Commodities Currencies Indices Stocks & Shares | CFDs Futures |
| Plus500 Ltd has a premium listing on the Main Market of the London Stock Exchange since 2018 (symbol: PLUS) and is a constituent of the FTSE 250 index. Also, the UK subsidiary - Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). The broker offers access to CFDs on Commodities, Forex, Stocks, ETFs, Options and Indices; Real Shares (Available in certain EU countries only); and Futures (Available in the US only). This broker has +26 million registered customers across 50 countries. Risk Warning: CFDs are complex instruments and carry a high risk of losing money quickly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money | |||
S&P 500 Index ETFs
 | S&P 500 | S&P 500 LON:WSPX / USD |    |
| S&P 500 3x Daily Leveraged | S&P 500 LON:3USL / USD | |
| S&P 500 3x Daily Short | S&P 500 LON:3USS / USD | |
Latest S&P 500 Index News
Coinbase promotion: is crypto now a part of the establishment?
Coinbase has joined the S&P 500 index, a clear sign that crypto has broken into the financial establishment’s inner sanctum
The prospect of new all-time highs in global equity indices?
The US fiscal position gets more attention, with the House Budget Committee having a second attempt at passing Trump’s reconciliation bill
Trade hopes fuel firmer sentiment
The markets get a bump as hopes rise of positive outcomes in trade talks between the US and its trading partners
Oil dives, equities rally, Fed cautious
The oil markets get increased attention with the OPEC+ alliance clearly fractured. Aussie markets look set to get a bump from the Labor victory.
The market is trading on hope – not reality
Stocks advanced on Friday as trade hopes grew with Treasuries and the dollar extending recent gains. This week, a jam-packed calendar awaits.
What should investors be doing in a crashing stock market?
Several experts gave us their take on the markets and what investors should be thinking about as global equities crash.
Everything looks ugly; everything will probably get uglier
Stocks continue to slump across the globe as the ugly fallout from Trump’s ‘reciprocal’ tariffs continues. Is there worse to come?
Navigating market reversals and key risk events
Tariffs, EU/China fiscal policy and an unwind of US exceptionalism were clear themes impacting macro markets last week, resulting in some truly momentous moves
Sentiment sours as US exceptionalism looks more fragile
Stocks slumped and havens rallied on Friday amid jitters over US economic outperformance. Another quiet data docket awaits this week
Trump’s reciprocal tariffs and their global implications
Another lively start in a week where Trump will be everywhere, including a key announcement detailing reciprocal tariff outcomes
