How to invest in the S&P 500 in the UK

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in. Tax treatment depends on your individual circumstances and may be subject to future change. The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice.

Investments in a currency other than GBP are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in GBP terms. You could lose money in GBP even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

Interested in investing? If you’re new to the world of stocks and shares, one of the first things you need to know about are stock market indexes.

In this guide, we’ll be taking a close look at one of the world’s leading indexes - the S&P 500. We’ll run through what it is, how to invest in the S&P 500 as a UK investor and any costs you’re likely to encounter.

We’ll also show you how to swerve unnecessary costs when investing, by opening a Wise account to manage your money in multiple currencies. This helps you avoid unfair currency conversion fees when buying or selling shares, stocks and funds listed abroad.

What is a stock market index?

A stock market index brings together data from companies across industries to capture the performance of a selection of stocks. It moves up or down in accordance with the price changes of stocks in different companies.

It’s a valuable tool for investors, as they can use this data to compare current and past prices, and calculate market performance.

What is the S&P 500?

The Standard & Poor’s 500 Composite Stock Price Index - commonly known as the S&P 500 - is a stock market index which tracks share prices for the 500 largest publicly listed companies in the United States. It’s one of the most well known stock market indexes in the world.

Like other stock market indices such as the FTSE 100 in the UK, it’s used by investors and brokers as a tool for following the performance of stocks.

Can I invest in the S&P 500 from the UK?

Yes, UK investors can buy shares and invest in funds related to the S&P 500.

While you yourself may be based in the UK, you can invest in stock markets worldwide with the right online investment platform or broker.

What S&P 500 funds can I buy in the UK?

You can buy individual shares in S&P 500 companies as a UK investor. But this can potentially be complicated and expensive to maintain, especially if you’re new to investing.¹

So you could instead look to invest in an S&P 500 fund. Exchange-traded funds (ETFs) replicate the performance of a specific index or benchmark, by investing in a representative sample of the stocks it tracks.

So if you invest in an ETF which tracks the S&P 500, your investment will be spread across stocks in all 500 companies (or a specific industry sector).¹

Here are some examples of S&P 500 ETFs you can invest in from the UK:¹

• SPDR® S&P 500 ETF
• Fidelity 500 Index Fund
• iShares Core S&P 500 ETF USD Dist
• Vanguard S&P 500 UCITS ETF
• HSBC S&P 500 ETF.

Which companies are in the S&P 500 index?

The top companies in the S&P 500 are industry-leading names in the US that you might recognise. To name but a few examples, the index includes:

• Microsoft
• Apple
• Amazon
• Tesla
• Mastercard
• Walmart
• PepsiCo
• Walt Disney Company
• McDonald’s
• NIKE
• Starbucks
• Boeing
• PayPal.

Searching for something in particular? Use the Wise Stock ticker tool to search for stock or a fund, and see the latest prices.

How to invest in S&P 500 stocks from the UK

The easiest way to invest in S&P 500 stocks from the UK is to use an online investment platform. Here’s how to do it, step-by-step:²

1. Research which platforms offer S&P 500 trading

To save you some time, we’ll run through a quick list of S&P 500 investment platforms a little later in this guide. However, you should find that most of the big platforms cover it.

To choose the right platform for you, a key thing to look for is fees and charges. You’ll also want one that is user-friendly for newbie investors.

2. Create an account

To invest in S&P 500, you’ll need an investment account that offers index funds. You’ll usually need to provide some personal details as part of the application process, as well as verifying your identity.

3. Add funds to your account

You’ll need to transfer funds from your bank account over to your investment platform, ready to purchase shares or invest in a fund.

4. Buy the S&P 500 fund

With your account topped up, all that’s left to do is follow the platform’s process for buying your chosen S&P 500 index fund.

S&P 500 investment platforms

Here are just a few of the investment platforms and trading apps available to UK residents, which let you buy S&P 500 shares directly or invest in S&P 500 ETFs:

• eToro
• XTB
• Hargreaves Lansdown
• Trading 212
• Interactive Brokers.

How much does it cost to invest in the S&P 500?

When you invest in the S&P 500, you’re likely to encounter two fees. The first is the commission fee for each trade, while the second is a foreign exchange fee for converting your money from GBP to USD.

Let’s take a look at the main fees of both kinds for popular trading platforms:

Platform	US trade (commission) fees	Foreign exchange fees
eToro	£03	1.5%4
XTB5	£0	0.5%
Hargreaves Lansdown6	£11.95	1%
Trading 2127	£0	0.15%
Interactive Brokers8	£1.45	0.03%

Investing in the S&P 500 from the UK: pros and cons

Pros ✅

• Access to stocks for the largest and most successful companies in the US
• Invest in ETFs and funds to diversify your portfolio
• Trading in S&P 500 available on most popular trading platforms.

Cons ⛔

• Your portfolio isn’t fully diversified, as the S&P 500 only includes US stocks
• Foreign exchange (FX) fees might apply, making trading more expensive
• Buy a S&P 500 fund and you have no control over the investments, and most of your money will go to the top stocks due to market cap weighting means most of your investment goes to the top stocks.

Don’t let currency conversion trip you up

In this article, we’ve looked at how to invest in S&P 500 stocks here in the UK, covering everything you need to know to get started.

But if you’re planning on buying and selling shares and funds listed abroad, there’s another crucial thing to consider - currency conversion.

Trade in different currencies and you could be hit with extra cost for cross border money transfer.

The good news is that you can use Wise to avoid hidden currency exchange markups and fees when buying and selling shares, stocks and funds listed in the US and worldwide. Open a Wise account and you can convert currency at mid-market exchange rates, for low, transparent fees*.

You may wish to hold your money in a Wise account until you decide to invest it in your chosen platform.

You can also use your Wise account to conveniently manage your money in up to 40+ currencies, sending payments worldwide a the mid-market rate for low fees*.

There’s even an extra feature, Wise Interest. With a Wise account you can earn returns on GBP, USD and EUR by opening a Wise account and investing in a fund that holds government-guaranteed assets. Capital at risk.

Open your Wise account

Capital at risk. Growth not guaranteed. Wise Assets UK Ltd is authorised and regulated by the Financial Conduct Authority with registration number 839689. When facilitating access to Wise investment products, Wise Payments Ltd acts as an Introducer Appointed Representative of Wise Assets UK Ltd. Please be aware that we do not offer investment advice, and you may be liable for taxes on any earnings. If you’re uncertain, we urge you to seek professional advice. To find out more about the Funds, visit our website.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in. Tax treatment depends on your individual circumstances and may be subject to future change. The content of this article is provided for informational purposes only and is not intended to be, nor does it constitute, any form of personal advice.

Investments in a currency other than GBP are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in GBP terms. You could lose money in GBP even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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Sources used:

1. The Times Money Mentor - S&P 500 ETFs
2. Finder - steps to invest
3. eToro - eToro fees and charges
4. eToro - eToro conversion fees
5. XTB - XTB fees and charges
6. Hargreaves Lansdown - Hargreaves Lansdown fees and charges
7. Trading 212 - trading terms for Trading 212 accounts
8. Interactive Brokers - US stock trading costs for UK residents

Sources last checked on date: 23-Aug-2024