The S&P 500 index (^GSPC +0.84%) has dipped more than 10% from its peak in 2025. That puts the market gauge into correction territory, which might entice some investors to buy an S&P 500 index exchange-traded fund (ETF).
There are a variety of options to choose from. Which is the best choice right now? Here are a few ideas.
What does the S&P 500 index do?
From a big-picture perspective, the S&P 500 index tracks the stock market. Or at least that's how the index is generally used. When you actually dig into the way the index is constructed, the view changes just a little bit. A committee selects large and important U.S. companies that are representative of the U.S. economy for inclusion in the index based on certain criteria and updates the list periodically as companies change over time. The stocks of those companies are then market-cap-weighted within the index.
Image source: Getty Images.
This is a totally logical way to track the market, but the S&P 500 index is kind of tracking the U.S. economy as a whole. Market cap weighting, meanwhile, ensures that the largest companies have the greatest impact on performance. That, too, is in keeping with the way the broader U.S. economy works. You can easily buy exchange-traded funds that simply mirror this approach.
The granddaddy of all ETFs is SPDR S&P 500 Trust (SPY +0.80%). It was the first ETF created, but it has one small problem: its expense ratio. At 0.09% (actually a pretty modest cost), the expense ratio is higher than other S&P 500 index choices. For example, Vanguard S&P 500 ETF (VOO +0.82%) has an expense ratio of 0.03%. That may seem like a minor difference, but over time, Vanguard S&P 500 ETF is going to track the index more closely, and that can add up.
Data by YCharts.
Variations on the S&P 500 index theme
That said, you don't just have to buy the S&P 500 index as it exists. Wall Street has provided other options. For example, there is ProShares Ultra S&P 500 ETF (SSO +1.60%), which seeks to double the performance of the S&P 500 index each day. Or, conversely, you could buy the ProShares Short S&P 500 ETF (SH 0.74%), which seeks to perform inversely to the index on a one-to-one basis.
Data by YCharts.
These are risky investment choices that only the most aggressive investors should be looking at. But they aren't the most aggressive options, with ProShares offering several funds that seek to provide returns that are multiples of the index (2x and 3x) to the upside and downside. If you are considering one of these ETFs, remember that what goes up also goes down in multiples of the index's performance. You probably won't want to go this route, but there is one option that is a bit more interesting.
Invesco S&P 500 Equal Weight ETF (RSP +0.28%) takes all of the same S&P 500 index components and, instead of using market cap weighting, assigns an equal amount of money to each stock. This is an interesting change because it means that every stock has the same opportunity to impact performance. One of the problems with the S&P 500 index is that hot stocks and sectors tend to become large and then have a disproportionately positive impact on returns, but when the hot stocks and sectors cool off, they have the reverse impact.
Data by YCharts.
What's interesting is that, over the long term, equal weighting appears to have been a net benefit for investors. That won't be true in every period, be it a day, week, month, or year, but as the chart above shows, equal weighting has enhanced performance over time. Notably, it is also likely to provide some downside protection as well, since periods of transition won't be overly impacted by a small number of large companies.
There are two clear winners
If you are looking to just buy a simple S&P 500 index ETF, the best option is going to be the cheapest option. An ETF like Vanguard S&P 500 ETF is a solid choice. But if you are willing to consider a slight variation on the traditional S&P 500 index approach, equal weighting could be the best option of all. Invesco S&P 500 Equal Weight ETF is the choice to go with on that front.
