The is a market-capitalization-weighted index of 500 large-cap U.S. companies that make up 80% of U.S. equities by market cap. It is widely regarded as the best gauge of large-cap U.S. equities and is often referred to as the market because it is comprised of stocks that span all market sectors. Some of the S&P 500's largest components include:
- Microsoft (MSFT)
- Apple (AAPL)
- Amazon (AMZN)
- Alphabet (GOOGL)
- Tesla (TSLA)
There are many funds whose stock portfolios are designed to track those of the S&P 500 due to the index's popularity as a barometer of U.S. equity markets, including mutual funds and exchange-traded funds (ETFs). ETFs differ from mutual funds because they are listed on exchanges and traded throughout the day like ordinary stocks.
Below we look at the top S&P 500 index funds, one with the lowest fees and the other with the highest liquidity. All data below is as of Feb. 15, 2023.
Key Takeaways
- Index investing has been gaining momentum over the past decade, with passive funds often outperforming their active counterparts for a lower cost.
- Among index investors, the S&P 500 has been the most widely watched benchmark index to track.
- The index is widely considered a barometer of the U.S. large-cap equity market.
- Investors may want to consider index funds offered by Fidelity, Schwab, Vanguard, and State Street.
- State Street has a viable ETF option that tracks the performance of the S&P 500.
Lowest Cost S&P 500 Index Fund: Fidelity 500 Index Fund (FXAIX)
FXAIX is a mutual fund. Because index-tracking funds will follow the performance of the index, one of, if not the, biggest determinant of long-term returns is how much it charges in fees.
- Expense Ratio: 0.015%
- 2022 Return: -18.13%
- Yield: 1.33%
- Assets Under Management (AUM):$373.8 billion
- Minimum Investment: $0
- Inception Date: Feb. 17, 1988 (Share Class Inception Date: May 4, 2011)
- Issuing Company: Fidelity
Lowest Cost Runner Up: Schwab S&P 500 Index Fund (SWPPX)
Schwab's S&P 500 index fund seeks to track the total return of the S&P 500 Index. The fund generally invests at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in these stocks. The actual percentage is typically considerably higher. It generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.
- Expense Ratio: 0.02%
- 2022 Return: -18.13%
- Yield: 1.35%
- AUM:$60.8 billion
- Minimum Investment: $0
- Inception Date: May 19, 1997
- Issuing Company: Charles Schwab
Lowest Cost Runner Up: Vanguard 500 Index Fund Admiral Shares (VFIAX)
Vanguard was the original index fund and still has the largest assets under management, with over $792.6 billion in its Vanguard 500 Index Fund Admiral Shares, as of Jan. 31, 2023. The investment seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stocks. The fund employs an indexing investment approach designed to track the performance of the Standard & Poor's 500 Index.
- Expense Ratio: 0.04%
- 2022 Return: -18.15%
- Yield: 1.58%
- AUM:$792.6 billion
- Minimum Investment: $3,000
- Inception Date: Nov. 13, 2000
- Issuing Company: Vanguard
As with any investment, make sure you do your research before purchasing any mutual funds or ETFs. If you have any doubts, consult a financial professional you can trust to help guide you in the right direction.
Lowest Cost Runner Up: State Street S&P 500 Index Fund Class N (SVSPX)
Also in the running is State Street's offering, which also closely tracks the S&P 500 Index. This fund, however, requires a minimum investment of $10,000.
- Expense Ratio: 0.16% (net)
- 2021 Return: 28.54% (most recent available)
- Yield: 1.76%
- AUM:$1.3 billion
- Minimum Investment: $10,000
- Inception Date: Dec. 30, 1992
- Issuing Company: State Street
Most Liquid S&P 500 Index Fund: SPDR S&P 500 ETF (SPY)
SPY is an ETF, not a mutual fund, and it's not even the lowest-cost S&P 500 ETF. It is, however, the most liquid S&P 500 fund. Liquidity indicates how easy it will be to trade an ETF, with higher liquidity generally meaning lower trading costs. Trading costs are not a big concern to people who want to hold ETFs long-term, but if you’re interested in trading ETFs frequently, then it’s important to look for high-liquidity funds to minimize trading costs.
- Expense Ratio: 0.09%
- 2022 Return: 18.14%%
- Yield:1.56%
- AUM: $382.1 billion
- Minimum Investment: $464.68
- Inception Date: Jan. 22, 1993
- Issuing Company: State Street
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
FAQs
Top S&P 500 index funds in 2024
| Fund (ticker) | 5-year annual returns | Expense ratio |
|---|
| iShares Core S&P 500 ETF (IVV) | 14.5% | 0.03% |
| Schwab S&P 500 Index (SWPPX) | 14.5% | 0.02% |
| Vanguard 500 Index Fund (VFIAX) | 14.5% | 0.04% |
| Fidelity 500 index fund (FXAIX) | 14.5% | 0.015% |
4 more rowsApr 5, 2024
All S&P 500 index funds track the same benchmark. So the primary factor to think about is expense ratios. Fees directly reduce your fund's returns. Keeping them as low as possible is crucial.
Is Investing in the S&P 500 enough? ›
Investing in an S&P 500 fund can instantly diversify your portfolio and is generally considered less risky. S&P 500 index funds or ETFs will track the performance of the S&P 500, which means when the S&P 500 does well, your investment will, too. (The opposite is also true, of course.)
Should I invest $10,000 in S&P 500? ›
Assuming an average annual return rate of about 10% (a typical historical average), a $10,000 investment in the S&P 500 could potentially grow to approximately $25,937 over 10 years.
What is the best index fund for beginners? ›
For beginners, the vast array of index funds options can be overwhelming. We recommend Vanguard S&P 500 ETF (VOO) (minimum investment: $1; expense Ratio: 0.03%); Invesco QQQ ETF (QQQ) (minimum investment: NA; expense Ratio: 0.2%); and SPDR Dow Jones Industrial Average ETF Trust (DIA).
Which index fund has highest return? ›
ICICI Prudential Nifty 50 Index Fund-Growth is among India's top 10 index funds. It falls within the Large Cap Index category. Over the past year, ICICI Prudential Nifty 50 Index Fund-Growth has returned 15.09 percent. Since its inception, it has delivered an average annual return of 14.74 percent.
How should a beginner invest in the S&P 500? ›
For new investors, the best way is through an ETF or mutual fund. While there are some differences between the two that we'll explain below, funds are a low-cost way to gain exposure to the S&P 500 and provide instant diversification to your portfolio.
Is it wise to invest in VOO? ›
Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.
Where is the best place to buy S&P 500 index fund? ›
| Compare the Best Online Brokers |
|---|
| Fidelity Investments | Best Overall, Best for Low Costs, Best for ETFs | 4.8 |
| TD Ameritrade | Best for Beginners and Best Mobile App | 4.5 |
| Tastyworks | Best for Options | 3.9 |
| Interactive Brokers | Best for Advanced Traders and Best for International Trading | 4.2 |
1 more rowAccording to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
Berkshire Hathaway CEO Warren Buffett has regularly recommended an S&P 500 index fund. The S&P 500 has been a profitable investment over every rolling 20-year period in history.
How much would $1000 invested in the S&P 500 in 1980 be worth today? ›
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500, then you would be sitting on a cool $1.2 million today.
How to become a millionaire with S&P 500? ›
If the S&P 500 outperforms its historical average and generates, say, a 12% annual return, you would reach $1 million in 26 years by investing $500 a month.
How much will S&P 500 grow in 10 years? ›
Returns in the S&P 500 over the coming decade are more likely to be in the 3%-6% range, as multiples and margins are unlikely to expand, leaving sales growth, buybacks, and dividends as the main drivers of appreciation.
Why not just invest in the S&P 500? ›
A portfolio that is just in the S & P 500 can be more volatile than a more broadly diversified portfolio, provide less income and may have negative tax consequences. In the 70 years from 1947 to 2016, the S&P 500 had 27 declines of at least 10 percent but less than 20 percent, or once every 2.6 years.
What are the best S&P 500 stocks to buy? ›
Sign up for Kiplinger's Free E-Newsletters
| Company (ticker) | Analysts' consensus recommendation score | Analysts' consensus recommendation |
|---|
| Amazon.com (AMZN) | 1.30 | Strong Buy |
| Microsoft (MSFT) | 1.32 | Strong Buy |
| Delta Air Lines (DAL) | 1.35 | Strong Buy |
| Nvidia (NVDA) | 1.38 | Strong Buy |
15 more rowsThe SPDR S&P 500 ETF Trust reigns supreme as the most popular S&P 500 ETF. The first ETF launched in the U.S. has maintained this status thanks to its strong institutional backing and first-mover advantage. SPY doesn't have the lowest expense ratio on our list. But it makes up for this in liquidity.
Is S&P 500 index fund the best investment? ›
That's why many investors, especially beginners, find index funds to be superior investments to individual stocks. Attractive returns: Like all stocks, major indexes will fluctuate. But over time indexes have made solid returns, such as the S&P 500's long-term record of about 10 percent annually.
What is better S&P 500 index fund or ETF? ›
The Bottom Line. Both index mutual funds and ETFs can provide investors with broad, diversified exposure to the stock market, making them good long-term investments suitable for most investors. ETFs may be more accessible and easier to trade for retail investors because they trade like shares of stock on exchanges.
