It's a common misconception that you need to buy individual stocks to create wealth in the stock market. While it's certainly possible to achieve excellent returns by doing so, you might be surprised at how well the stock market has performed over time.
Over the course of several decades, the benchmark S&P 500 -- widely regarded as the best indicator of the overall stock market -- has delivered annualized total returns of approximately 10%. A return rate like this, sustained over a long period, can help you create a surprising amount of wealth.
Exchange-Traded Fund (ETF)
That's where an S&P 500 ETF can be handy. There are several great ETFs that allow you to track the performance of this benchmark index with a bare minimum of expense.
ETF Name | Annual Fees (Expense Ratio) | Assets Under Management | Description |
|---|---|---|---|
SPDR S&P 500 ETF Trust (NYSEMKT:SPY) | 0.0945% | $712 billion | The first S&P 500 ETF in the U.S. |
iShares Core S&P 500 ETF (NYSEMKT:IVV) | 0.03% | $761 billion | An S&P 500 ETF managed by one of the largest asset managers around. |
Vanguard S&P 500 ETF (NYSEMKT:VOO) | 0.03% | $1.48 trillion | Low-cost S&P 500 ETF option from a pioneer in the retail investing industry. |
ProShares Short S&P500 (NYSEMKT:SH) | 0.89% | $900 million | A fund designed to profit from betting against the S&P 500. |
Invesco S&P 500 Equal Weight ETF (NYSEMKT:RSP) | 0.20% | $75 billion | An ETF that provides equal exposure to all 500 components of the index. |
Investing in S&P 500 ETFs
There are a number of advantages to investing in an S&P 500 ETF. The S&P 500 tracks the performance of 500 of the largest U.S.-based companies.
Although thousands of stocks are listed on a U.S. stock exchange, many investors default to the S&P 500 when assessing the strength of U.S. stocks. That makes sense, given that more than 80% of the total U.S. stock market value comprises these 500 businesses.
Investing in the 500 companies that make up the S&P 500 can be a solid option, too. After all, it takes time and a powerful business to make it on this list of top corporations. Although not all S&P 500 companies are problem-free, the index includes many high-quality stocks.
As of this writing, top stocks in this index run the gamut from big tech companies, such as Microsoft (MSFT -0.83%), Apple (AAPL +0.62%), and Amazon (AMZN -1.02%) to Warren Buffett's industrial conglomerate Berkshire Hathaway (BRK.A +1.19%)(BRK.B +0.80%) and top healthcare companies, such as UnitedHealth Group (UNH -1.83%) and Johnson & Johnson (JNJ -0.06%).
With that in mind, here are five top ETFs that track the performance of the S&P 500 index.
Best S&P 500 ETFs
In no particular order, here are five great examples of S&P 500 ETFs you might want to consider.
1. SPDR S&P 500 ETF Trust
NYSEMKT: SPY
Key Data Points
The SPDR S&P 500 ETF (SPY -0.35%) from State Street Global Advisors was the first ETF to be listed in the U.S. The fund has been available since 1993. Paired with the S&P 500 index's popularity, this has made the SPDR S&P 500 ETF one of the largest exchange-traded fund products around, with $712 billion in investor funds under management as of early 2026.
The SPDR S&P 500 ETF tracks the performance of the S&P 500 index, less the annual fee, and distributes dividends paid by the companies in the index. The ETF charges 0.0945% per year in annual fees. For every $1,000 invested, that works out to just less than $0.95 per year, subtracted from the fund's performance.
2. iShares Core S&P 500 ETF
NYSEMKT: IVV
Key Data Points
The iShares Core S&P 500 ETF (IVV -0.30%) is another long-tenured U.S. ETF that invests in the stocks of the S&P 500 index. It offers an almost identical investing product to the SPDR offering, except that iShares' annual fee is even lower at just 0.03% per year.
The fund was launched in 2000 and had more than $700 billion in assets under management in early 2026. iShares is the ETF division of massive investment manager BlackRock (BLK -0.78%), which collectively manages $13.5 trillion in global assets.
Assets Under Management (AUM)
3. Vanguard S&P 500 ETF
NYSEMKT: VOO
Key Data Points
Like the previous two ETFs, the Vanguard S&P 500 ETF (VOO -0.32%) is a simple way to invest in the companies of the S&P 500 index. It also charges just 0.03% annually. This fund (along with its mutual fund version) has about $1.5 trillion in assets under management as of early 2026.
Vanguard’s founder, Jack Bogle, invented the passive index fund in the 1970s, which helped revolutionize access to investments for everyday retail investors.
4. ProShares Short S&P500
NYSEMKT: SH
Key Data Points
Unlike the previous ETFs, the ProShares Short S&P500 (SH +0.37%) fund is a way to bet against the S&P 500 index. An investor might seek to profit by betting against an investment, as some investors did during the bear market of 2022. It can also be used as a hedge if you think the market might be a little overvalued, but you aren't exactly ready to start selling your stocks.
The ProShares Short S&P500 aims to provide a return exactly the inverse of the S&P 500 index's daily return. So, if the S&P 500 is up 1% on a given day, the ProShares fund will be down 1% (before fees, which total 0.89% on an annualized basis).
The fund may have a place in the portfolios of investors seeking to hedge against what they anticipate will be a market downturn. However, remember that due to the use of derivatives contracts and the compounding effect of returns, the ProShares fund is designed only to reflect daily inverse returns of the S&P 500, not to be a buy-and-hold fund over extended periods. Fund performance will deviate from the exact inverse of the S&P 500's performance.
Additionally, although designed to act as a hedge in a bear market, this ETF will decline significantly in value during a bull market. Investors should note this particular risk and understand the fund's function as a shorter-term hedge.
5. Invesco S&P 500 Equal Weight ETF
NYSEMKT: RSP
Key Data Points
What to look for when choosing an S&P 500 ETF
As you can see, there are a few excellent S&P 500 ETFs that we've discussed, and this isn't an exhaustive list of all of the available products. Before deciding which is best for you, consider a few key factors.
- Expense ratio: Of course, between two funds that track the exact same index, a lower fee structure is better. While the difference between a 0.03% and 0.04% expense ratio isn't going to have a big impact on your performance over the long run, there are enough excellent S&P 500 ETFs that under no circumstances should you accept an expense ratio above 0.1%.
- Weighted or not: Before you buy a traditional S&P 500 ETF, you need to be comfortable with about 40% of your money being invested in just 10 big companies. If you'd prefer a more diversified approach, the equal-weight fund discussed earlier could be the better option.
- Performance: All S&P 500 index funds publish their performance history compared to the benchmark index. Make sure that the index fund you buy doesn't have a significant tracking error -- that is, make sure its long-term performance is very close to that of the index.
Benefits of investing in the S&P 500
As Warren Buffett has said, investing in the S&P 500 is a bet on American business, which has historically been a good bet for long-term investors.
In a nutshell, buying shares of an S&P 500 ETF allows you to benefit from the growth of the U.S. economy over time and the most successful companies in the nation, but without the guesswork and added risks of choosing individual stocks.
Related investing topics
Drawbacks to investing in the S&P 500
Investing in an S&P 500 ETF can lay a great foundation for an investment portfolio. It isn't necessarily the be-all and end-all of investing, though. Just a few things to keep in mind:
- The S&P 500 is a market-cap-weighted index. In early 2026, the top 10 stocks in the index made up almost 40% of the S&P 500.
- Investing solely in the S&P 500 may not be the optimal strategy for retirees seeking income. Incorporating other asset classes into the mix would be advisable.
- Younger investors with decades until they plan to tap into their investments may also want to invest outside of the S&P 500.
Nevertheless, for investors seeking a straightforward way to start their investing journey, an S&P 500 ETF is an excellent place to begin.
FAQ
S&P 500 ETF FAQ
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