The S&P 500 is one of the most famous stock indices. Getty Images/Jonathan Kitchen, monsitj, Willard
The S&P 500 is a stock index that reflects the performance of the 500 largest US companies. Investors can invest in the S&P 500 through ETFs such as the SPDR S&P 500 ETF, iShares Core S&P 500 ETF or Vanguard S&P 500 ETF. Compared to the MSCI World Index, which includes companies from 23 countries, the S&P 500 focuses exclusively on US companies.
The S&P 500 is one of the most well-known stock indices in the world and an important indicator for the US stock market. We will explain to you what the index is made up of, how you can invest in the S&P 500 and how it currently compares to the MSCI World Index.
What is the S&P 500?
The S&P 500, also known as the Standard and Poor’s 500, is a stock index that reflects the performance of the 500 largest publicly traded companies in the United States. In addition to Dow Jones and Nasdaq, the S&P 500 is the third major US stock market barometer. The index was introduced in March 1957 and mathematically dates back to 1950. The S&P 500 is published by Standard & Poor’s. The American rating company evaluates companies based on their creditworthiness.
What is the composition of the S&P 500?
The composition of the S&P 500 is based on the market capitalization of the companies included. This means that companies with larger market capitalizations have a greater impact on the index than smaller companies. The composition of the index is regularly reviewed and adjusted to ensure that it reflects current market trends.
To illustrate the composition of the S&P 500, let’s take the iShares Core S&P 500 ETF (ISIN: IE00B5BMR087), which tracks the index, as an example. The index fund has a volume of $78,148.35 million.
The current top 10 positions:
Pursue weightingMicrosoft 7,20 %Apple 5,83 %Nvidia 5,05 %Amazon.com 3,71 %Meta Platforms 2,48 %Alphabet 1,94 %Berkshire Hathaway1,73 %Alphabet 1,63 %Eli Lilly and Co1,40 %JPMorgan Chase & Co1,28 %Finanzen.netthe data was accessed on March 20, 2024.
In addition to the weighting of individual companies, investors can also look at the industry weighting. This currently looks like this:
Industry weighting in the iShares Core S&P 500 ETF, as of March 20, 2024 Finanz.net
This means that a large part of the money (13.04 percent) currently flows into software companies. This is followed by companies from the semiconductor industry with 10.16 percent and providers from the hardware sector with 7.62 percent. Important: Table and chart only show a snapshot.
How can I invest in the index?
There are several ways to invest in the S&P 500. On the one hand, investors can buy stocks that are included in the index. However, it is more common and easier to purchase an ETF that tracks the S&P 500.
Definition: What are ETFs?
Exchange Traded Funds, or ETFs for short, are index funds that replicate a stock, bond or raw material index and are traded on the stock exchange.
Replicating the index can be done in two ways: physical or synthetic. While physical ETFs invest in the securities that the index contains, synthetic ETFs replicate the index via swap transactions. For this purpose, the ETF provider concludes a contract with the swap partner – which is usually the financial institution. The latter pays the index return including the dividend in exchange for a fee.
Which S&P 500 ETFs are there?
There are some ETFs that track the index and allow you to invest in the S&P 500. Some of the most well-known and widely traded funds are the SPDR S&P 500 ETF (IE00B6YX5C33), the iShares Core S&P 500 ETF (IE00B5BMR087) and the Vanguard S&P 500 ETF (IE00B3XXRP09). Investors can also invest in the index through other providers. You should always pay attention to the fees of the index fund, but also to the fund volume and how long the provider has been established on the market.
The iShares Core S&P 500 ETF is coming over a year to a performance of 31.3 percent. Over three years the ETF is included 14.33 percent per year and over five years at 15.20 percent in the year.
S&P 500 stock chart over one year, as of March 20, 2024 Finanz.net
How does the S&P 500 differ from the MSCI World?
The S&P 500 focuses exclusively on US companies, while the MSCI World takes a more global approach and includes companies from around the world. Nevertheless, the MSCI World does not represent the entire world. The stock index reflects the performance of around 1,600 stocks from 23 industrialized countries. The USA dominates with a current share of almost 70 percent, followed by Japan and Great Britain with six and four percent.
This means that the S&P 500 is more influenced by specific developments in the US market, while the MSCI World reflects a broader range of market trends – although the US weighting is also high there.
This is how the S&P 500 works in contrast to the MSCI World
Should investors now bet on the S&P 500 or the MSCI World? This question is difficult to answer and depends on the investor’s preferences.
Im Yield comparison is currently cutting S&P 500 performed slightly better. Because the iShares Core MSCI World ETF comes over a year on only 27.1 percent and is therefore three percentage points behind the iShares Core S&P 500 ETF. If you look at the development over a longer period of time, that’s what happens Welt-ETF above three years on 11.48 percent per year and over five years on 12.61 percent per year – also lags slightly behind the iShares Core S&P 500 ETF.
Die volatility is for both ETFs similarly high. The iShares Core S&P 500 ETF has a volatility of 17.65 percent over three years and 18.34 percent over five years.
The iShares Core MSCI World ETF, on the other hand, has a volatility of 17.03 percent over three years and 18.05 percent over five years. So it’s minimally lower.
All data was provided on March 20th Finanzen.net and Fund Web retrieved.
Disclaimer: Stocks and other investments generally involve risk. A total loss of the capital invested cannot be ruled out. The articles, data and forecasts published are not a solicitation to buy or sell securities or rights. They also do not replace professional advice.