How to invest in the S&P 500

The SP500 is the best-known stock market index in the world. In this article, we will talk about its characteristics, how it is composed, its components, the geographical distribution of its sales, the distribution of its returns, and most importantly, how we can invest in it.How to invest in the S&P 500

S&P 500: Characteristics, Components, and Geographical Distribution

Characteristics of the S&P 500

The S&P 500 is a stock index that follows the 500 companies with the largest capitalization in the United States. Not all large-cap companies are in the S&P 500. In order to be part of it, several requirements must be met:

  • Have a market capitalization of more than 13 billion dollars.
  • Be listed on an American market and not listed on OTC markets.
  • Most of the shares in circulation are in the hands of public investors, not insiders.
  • Be quoting for at least a year.
  • Have positive benefits in four consecutive quarters.
  • At least 50% of your fixed assets and sales must be in the United States.
  • That the price of your share is greater than $1.

Simply dividing the share price by the total number of shares in circulation yields market capitalization. As of February 28, 2023, the S&P 500 had an average capitalization of more than 69 trillion USD.  S&P Global Inc. is in charge of managing the index and rebalancing it every three months.

Each company’s weight in the S&P 500 depends on its capitalization. For example, a company with a capitalization of 500 billion dollars has a peso worth 50 times more than one with only a capitalization of 50 billion. But it is important to know that this weight only considers floating actions; that is, it excludes all those in the hands of insiders.

Components of the S&P 500

Although it was created in 1957, post-hoc reconstructions have been made to determine its performance in broader historical ranges.How to invest in the S&P 500

The S&P 500 is something alive that is changing as the American economy evolves and helps us see which sectors have more weight and importance. For instance, the industrial sector had the highest weight for many years up until the 1990s, then came discretionary and financial consumption. But from there, it falls to the fourth position, and the financial sector rises to the first, followed by discretionary consumption and technology.

This lasted more or less until 2008, when the global financial crisis arrived, and the technology sector gradually took its current position. Still, it had to climb from its penultimate position at the end of the 1960s.

Today the first 50 positions are these:

business Sector
1 Apple Information technology
2 Microsoft Corporation Information technology
3 Discretionary Consumption
4 Nvidia Information technology
5 Tesla Inc Discretionary Consumption
6 Berkshire Hathaway Inc. Class B Financial services
7 Alphabet Inc. Class A Communication services
8 Alphabet Inc. Class C Communication services
9 Exxon Mobil Corporation Energy
10 UnitedHealth Group Incorporated health

The technology sector represents just over 27% of the S&P500. These are the weights that each sector has:

Geographical distribution of the S&P 500

As San John Bogle said, if you invest in the S&P 500, you are also investing outside the United States. He mentioned this because most of the companies that make up the index have sales outside their country.

Although this is true, no matter how much there is diversification by sales, there is no diversification by regions or sectors because those sales are concentrated in a few American companies. For example, Exxon, Apple, Intel, and Amazon occupy the top positions.

Volatility of the SP500

The volatility of the S&P 500 index is measured through several indicators using historical price information. The three main indicators to measure the volatility of the S&P 500 are the Volatility Index (VIX), the Cross Correlation Coefficient (CC), and the Computed Price Movement Index (CPI).

Thus, one of the most important, the VIX, also known as the CBOE Volatility Index (Chicago Board Options Exchange), is an index used to measure the expectation of volatility in the market. It is mainly designed to reflect what investors anticipate will happen to the market in the next 30 days.

It is a key stock market tool for any investor because it offers important information about the movement expectations of the SP500. The VIX is calculated using a simple weighted average between the prices of put and call options on the S&P 500, thus producing a numerical value that gives us indications about the current state of the financial market.

Distribution of S&P 500 returns

The following graph shows the distribution of S&P 500 returns for annual ranges. This is very useful for three main reasons:How to invest in the S&P 500

  • We can give ourselves an idea of which returns are most likely.
  • Both extreme positives and extreme negatives are uncommon, and, therefore, there will be high probabilities of reversal to the average after them.
  • Negative returns are quite common; consequently, we are not scared when we see them.

S&P500 Distribution

How do I invest in the S&P 500?

To invest in the S&P 500, we can do it through indexed investment funds and also with indexed ETFs. If we would like to speculate or apply some trading strategy or hedging, we can also use the futures listed on the CME, such as the E-mini and the Micro E-mini. In this post, we will only see the alternatives we have with funds and ETFs.

We have several alternatives and we can divide them like this:

  • Funds indexed to the SP500
    • In dollars
    • In euros
    • In euros with currency coverage
  • ETFs indexed to the SP500
    • In dollars
    • In euros
    • In euros with currency coverage
    • Physical replica
    • Synthetic Replica
    • Accumulation

Best index funds that invest in S&P500

Background ISIN TER index Marketer
Amundi Index S&P 500 – AE (C) LU0996179007 0,30% S&P 500



EBN Bank


Rent 4…

Pictet-USA Index-R EUR LU047496624 0.75% S&P 500
Amundi Index MSCI North America – AE (C) LU0389812347 0,30% MSCI North America
Vanguard U.S. 500 Stock Index Fund EUR Acc IE0032126645 0,10% S&P 500
Fidelity S&P 500 Index Fund P-ACC-EUR IE00BYX5MX67 0.06% S&P 500
MyInvestor S&P500 Equiponderado ES0165242001 0.3% S&P500 Equal Weight Index

Best ETFs that invest in S&P500

Background ISIN TER Dividend Currency Where to Hire?
Lyxor Core Morningstar US (DR) UCITS LU1781540957 0.04% Dist EUR


Interactive Brokers

Scalable Capital

Trade Republic



Active Trade



JPMorgan BetaBuilders US Equity UCITS ETF IE00BJK9H753 0.04% Acc EUR
Amundi Prime USA UCITS ETF DR LU2089238468 0.05% Acc EUR
iShares Core S&P 500 UCITS ETF IE00B5BMR087 0.07% Acc EUR
Xtrackers MSCI USA Index UCITS ETF IE00BJ0KDR00 0.07% Acc EUR
Vanguard S&P 500 UCITS ETF IE00BFMXXD54 0.07% Acc EUR
Vanguard FTSE North America UCITS ETF IE00BK5BQW10 0,10% Acc EUR
SPDR Russell 2000 US Small Cap UCITS ETF IE00BJ38QD84 0,30% Acc EUR
Xtrackers Russell 2000 UCITS ETF IE00BJZ2DD79 0,30% Acc EUR
iShares MSCI USA Small Cap UCITS ETF IE00B3VWM098 0.43% Acc EUR


It is always important to consider having exposure to the S&P 500 since the American economy is not only the largest, but the capitalization of its stock market and the global reach of its companies do not have parallels so far. But at the same time, it can’t be our only exhibition.How to invest in the S&P 500

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