Best S&P 500 Index Funds
Best S&P 500 Index Funds
If any index is a proxy for the broad U.S. stock market, it's the S&P 500. Tracking America's biggest companies, from top-weighted Apple Inc. (ticker: AAPL) down to its smallest component, FMC Corp. (FMC), the S&P 500 is an index investors turn to for a mix of large-cap growth, value and income-generating stocks.
Despite the pullbacks and meltdowns that give investors heartburn, the S&P 500 has provided reliable growth over the years. Here are some of its annualized returns over longer periods as of March 20, according to S&P Global:
Three years: 8.3% 三年：8.3%
Five years: 19.7% 五年：19.7%
10 years: 10.4% 十年：10.4%
15 years: 11.1% 15 年：11.1%
While the broad index offers built-in sector and industry diversification, its market-capitalization weighting can sometimes skew returns in favor of heavyweights that can dominate.
An example is the recent outperformance of artificial intelligence-related stocks such as Nvidia Corp. (NVDA) and Microsoft Corp. (MSFT), before they fell back to earth in 2025.
Current Index Composition
The largest S&P 500 stocks and their weightings as of March 19 are:
Apple, 6.8%
Microsoft, 6%
Nvidia, 6%
Amazon.com Inc. (AMZN), 3.8%
Meta Platforms Inc. (META), 2.6%
While big techs have been the largest S&P components for the past several years, these are the top gainers and their year-to-date performance as of midday March 21:
CVS Health Corp. (CVS), +50.2%
Super Micro Computer Inc. (SMCI), +32.4%
Philip Morris International Inc. (PM), +25.5%
Vertex Pharmaceuticals Inc. (VRTX), +25.4%
Newmont Corp. (NEM), +22.6%
S&P Index Funds
You can't buy an index directly, but that's where index funds come in. Fortunately, investors have several choices, as they can access the S&P 500 through either exchange-traded funds or mutual funds.
But while all S&P 500 funds track the same index, they're not created equal. Differences in fees, tracking errors and fund structure can impact performance.
Here are five S&P 500 index funds that can help investors build a diversified, low-cost portfolio:
S&P 500 Index Fund
SPDR S&P 500 ETF Trust (SPY)
iShares Core S&P 500 ETF (IVV)
Vanguard S&P 500 ETF (VOO)
Fidelity 500 Index Fund (FXAIX)
Schwab S&P 500 Index Fund (SWPPX)
Despite the pullbacks and meltdowns that give investors heartburn, the S&P 500 has provided reliable growth over the years. Here are some of its annualized returns over longer periods as of March 20, according to S&P Global:
Three years: 8.3% 三年：8.3%
Five years: 19.7% 五年：19.7%
10 years: 10.4% 十年：10.4%
15 years: 11.1% 15 年：11.1%
While the broad index offers built-in sector and industry diversification, its market-capitalization weighting can sometimes skew returns in favor of heavyweights that can dominate.
An example is the recent outperformance of artificial intelligence-related stocks such as Nvidia Corp. (NVDA) and Microsoft Corp. (MSFT), before they fell back to earth in 2025.
Current Index Composition
The largest S&P 500 stocks and their weightings as of March 19 are:
Apple, 6.8%
Microsoft, 6%
Nvidia, 6%
Amazon.com Inc. (AMZN), 3.8%
Meta Platforms Inc. (META), 2.6%
While big techs have been the largest S&P components for the past several years, these are the top gainers and their year-to-date performance as of midday March 21:
CVS Health Corp. (CVS), +50.2%
Super Micro Computer Inc. (SMCI), +32.4%
Philip Morris International Inc. (PM), +25.5%
Vertex Pharmaceuticals Inc. (VRTX), +25.4%
Newmont Corp. (NEM), +22.6%
S&P Index Funds
You can't buy an index directly, but that's where index funds come in. Fortunately, investors have several choices, as they can access the S&P 500 through either exchange-traded funds or mutual funds.
But while all S&P 500 funds track the same index, they're not created equal. Differences in fees, tracking errors and fund structure can impact performance.
Here are five S&P 500 index funds that can help investors build a diversified, low-cost portfolio:
S&P 500 Index Fund
SPDR S&P 500 ETF Trust (SPY)
iShares Core S&P 500 ETF (IVV)
Vanguard S&P 500 ETF (VOO)
Fidelity 500 Index Fund (FXAIX)
Schwab S&P 500 Index Fund (SWPPX)
- 5-Best-S-amp-P-500-Index-Funds-to-Buy-Now-Investing-U-S-News-03-24-2025_01_13_PM.png (46.68 KiB) Viewed 2445 times
Re: Best S&P 500 Index Funds
SPDR S&P 500 ETF Trust (SPY)
SPY is one of the largest S&P 500 ETFs, with $587 billion in assets under management. Its ETF structure means it can be traded intraday like a stock. It's also suitable as a long-term hold.
"SPY is the most liquid, most actively traded S&P 500 ETF and is therefore best suited for active traders, options strategies and institutions that value tight spreads and deep liquidity," says Fei Chen, founder and CEO at Intellectia.AI, an investment and research platform based in Hong Kong.
He notes that this ETF, with an expense ratio of 0.095%, is slightly more expensive than some of its competitors. That means it may be less cost-effective than others for long-term buy-and-hold investors.
"For short-term tactical investors who value getting in and out quickly, SPY is still the default ETF based on its unmatched volume and options market," Chen adds.
SPY is one of the largest S&P 500 ETFs, with $587 billion in assets under management. Its ETF structure means it can be traded intraday like a stock. It's also suitable as a long-term hold.
"SPY is the most liquid, most actively traded S&P 500 ETF and is therefore best suited for active traders, options strategies and institutions that value tight spreads and deep liquidity," says Fei Chen, founder and CEO at Intellectia.AI, an investment and research platform based in Hong Kong.
He notes that this ETF, with an expense ratio of 0.095%, is slightly more expensive than some of its competitors. That means it may be less cost-effective than others for long-term buy-and-hold investors.
"For short-term tactical investors who value getting in and out quickly, SPY is still the default ETF based on its unmatched volume and options market," Chen adds.
Re: Best S&P 500 Index Funds
iShares Core S&P 500 ETF (IVV)
IVV's expense ratio of 0.03% is lower than SPY's. It's also structured differently, being an open-ended ETF instead of a trust. That means IVV allows dividend reinvestment, which means gains can compound over time.
That also means it doesn't distribute capital gains, which renders it more tax-friendly than SPY, Chen says. "Long-term investors wishing to save money and compound over time will love IVV," he says.
IVV's expense ratio of 0.03% is lower than SPY's. It's also structured differently, being an open-ended ETF instead of a trust. That means IVV allows dividend reinvestment, which means gains can compound over time.
That also means it doesn't distribute capital gains, which renders it more tax-friendly than SPY, Chen says. "Long-term investors wishing to save money and compound over time will love IVV," he says.
Re: Best S&P 500 Index Funds
Vanguard S&P 500 ETF (VOO)
Vanguard's version of the S&P 500 ETF also boasts a low expense ratio of 0.03%. That makes it a good value, says Vince Stanzione, founder of First Information, which publishes financial products with a focus on derivatives trading. "The majority of funds do not beat the S&P 500, yet charge much higher fees," he says.
VOO is now larger than SPY, with more than $618 billion under management. "It tends to be the best choice for most long-term investors seeking large-cap U.S. stock exposure," says Vince DeCrow, founder of Rise Investments in Chicago.
Vanguard's version of the S&P 500 ETF also boasts a low expense ratio of 0.03%. That makes it a good value, says Vince Stanzione, founder of First Information, which publishes financial products with a focus on derivatives trading. "The majority of funds do not beat the S&P 500, yet charge much higher fees," he says.
VOO is now larger than SPY, with more than $618 billion under management. "It tends to be the best choice for most long-term investors seeking large-cap U.S. stock exposure," says Vince DeCrow, founder of Rise Investments in Chicago.
Re: Best S&P 500 Index Funds
Fidelity 500 Index Fund (FXAIX)
Fidelity's S&P 500 index product is structured as a mutual fund. While investors may associate active funds with higher fees, the passively managed FXAIX has the lowest expense ratio of the S&P index trackers on this list.
This mutual fund has been around since 1998, pre-dating the massive rise of ETFs throughout the 2000s. "It only trades once per day, is less liquid than its ETF peers, and is slightly less tax-efficient," DeCrow says.
A benefit of the mutual fund structure, he adds, is that it provides investors with the ability to set up automated contributions to the fund, allowing a dollar-cost-averaging approach.
Fidelity's S&P 500 index product is structured as a mutual fund. While investors may associate active funds with higher fees, the passively managed FXAIX has the lowest expense ratio of the S&P index trackers on this list.
This mutual fund has been around since 1998, pre-dating the massive rise of ETFs throughout the 2000s. "It only trades once per day, is less liquid than its ETF peers, and is slightly less tax-efficient," DeCrow says.
A benefit of the mutual fund structure, he adds, is that it provides investors with the ability to set up automated contributions to the fund, allowing a dollar-cost-averaging approach.
Re: Best S&P 500 Index Funds
Schwab S&P 500 Index Fund (SWPPX)
This is another low-cost index fund tracking the S&P 500. Its expense ratio is 0.02%. "It is best suited for long-term investors within tax-advantaged accounts, where trading isn't a frequent concern," Chen says.
The fund's inception date was May 19, 1997, and since then it has racked up $106.5 billion in assets under management. Rated five stars by Morningstar, the fund has four managers with an average tenure of seven years. Its dividend yield is 1.2%, in line with other funds tracking the S&P 500, but its returns are considered above average for the category.
This is another low-cost index fund tracking the S&P 500. Its expense ratio is 0.02%. "It is best suited for long-term investors within tax-advantaged accounts, where trading isn't a frequent concern," Chen says.
The fund's inception date was May 19, 1997, and since then it has racked up $106.5 billion in assets under management. Rated five stars by Morningstar, the fund has four managers with an average tenure of seven years. Its dividend yield is 1.2%, in line with other funds tracking the S&P 500, but its returns are considered above average for the category.