What is the S&P 500?
The S&P 500 is one of the world’s most important stock market indices and has more than tripled in value over the last decade. But what is the S&P 500, and which companies does it contain?
Dan McEvoy
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The S&P 500 is a stock market index that acts as a barometer for the US stock market.
The index is made up of 500 of the largest companies in the US and represents around 80% of the total market capitalisation (market cap) of the country. That means that it is a good representation of the health of the stock market and US economy.
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Well-known investor Warren Buffett, whose consistently successful investments have earned him the nickname ‘Oracle of Omaha’, has held multiple S&P 500-linked ETFs, or exchange-traded funds, and famously said: “The goal of the non-professional should [...] be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.”
But Buffett also said that investors should invest in companies they’re familiar with, and while this applies more to individual stocks than indices, it is worth knowing which companies comprise the S&P 500, who runs the index, and whether it is worth investing in.
What are the S&P 500 companies?
The S&P 500 comprises 504 of the largest stocks in the US, though not necessarily the top 504 largest firms in the US.
Notable names in the S&P 500 include the ‘Magnificent Seven’ (Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, Alphabet), alongside stocks like Netflix, Mastercard, Coca-Cola, Pfizer, and 490 others.
Below is a table of the ten firms that have the largest weighting in the S&P 500:
# | Company | Weight |
|---|---|---|
1 | Nvidia | 7.53% |
2 | Apple | 6.31% |
3 | Microsoft | 4.61% |
4 | Amazon | 3.56% |
5 | Alphabet (Class A) | 3.15% |
6 | Alphabet (Class C) | 2.94% |
7 | Meta Platforms | 2.61% |
8 | Broadcom | 2.53% |
9 | Tesla | 2.40% |
10 | Berkshire Hathaway | 1.72% |
Source: SlickCharts, 24/02/2026
Stocks in the S&P 500 are weighted according to their market market capitalisation (market cap), meaning each one of the 500 companies represents a different amount of the index. For example, Nvidia represents around 7.5% of the S&P 500 while Hasbro only represents around 0.02%. Changes in the share price of the S&P 500’s largest stocks will have a greater impact on the index’s performance than those of its smallest stocks.
The index is often tracked by ETFs, where the price increases or decreases as the value of the S&P 500 rises and falls.
If you buy one of these tracker funds, your investment will effectively be divided proportionally between the different components of the index. For example, if you put £100 into an ETF that tracks the S&P 500, around £7.50 of your money would track the performance of Nvidia, but only around 2p would be invested in Hasbro.
The S&P 500 is not the only significant stock market index in the US, though it is the largest and most representative of the market as a whole.
Other significant indices include the Dow Jones industrial average, which tracks 30 prominent US stocks, and the Nasdaq-100 which tracks 100 of the largest non-financial companies listed on the Nasdaq stock exchange (and tends to be associated with tech stocks).
Who decides which companies are in the S&P 500?
The precursor to the S&P 500 was first created in 1923 when the Standard Statistics Company compiled a stock index with Poor’s Publishing that consisted of 233 US stocks. It later created an index of 90 stocks before the two companies merged in 1941 to form Standard & Poor's - the ‘S’ and the ‘P’ of S&P.
It was in 1957 that the S&P 500 as we understand it today was formed, though of course the stocks that comprise it now are very different. The company S&P Dow Jones Indices has managed the S&P 500 since 2011.
In order to become a member of the S&P 500, a firm must meet various criteria based on market cap, liquidity, free float, time since IPO, and profitability.
Once these requirements have been met, S&P Dow Jones Indices will decide whether the firm is able to join the index. A firm does not automatically become a constituent of the S&P 500 when it meets all the requirements.
Every quarter, the S&P 500 is rebalanced, meaning that S&P Dow Jones Indices, which manages the fund, will look at the 504 stocks that make up the index and decide whether or not they deserve to stay in the index. This is done to make sure the index still accurately represents the market.
While the S&P 500 is rebalanced at regular intervals, it can also be rebalanced if a sudden and significant event occurs such as a merger, acquisition, or bankruptcy.
Are S&P 500 index funds safe?
Different types of investors have different priorities as well as different attitudes towards risk. Some are willing to micro-manage their investments, while others are content with a more hands-off approach.
For the latter group, investing in an S&P 500-linked index fund or ETF seems the more appropriate solution as the inherent volatility associated with having a lot of your money invested in one stock is limited, and instead risk is more spread out.
For example, if you put all your money into an imaginary constituent of the S&P 500 called ACME that represented 0.01% of the index and it transpired that the firm had been lying about its earnings, causing the stock price to plummet, you would lose a lot of your investment. However, if you just put your money into the index you would likely only see a small loss as only 0.01% of your investment would be affected.
Victoria Hasler, head of fund research at Hargreaves Lansdown, told MoneyWeek: “Index funds can be a simple and cost-effective way to invest for those who want exposure to broad market indices.
“There are some major advantages to investing in an S&P 500 index fund; you know exactly what you are getting and should not have any nasty surprises, performance will be aligned to the headline numbers you expect (albeit usually slightly lower because of fees) and costs are kept to a minimum.”
But while the removal of high volatility and the hedging that exists when you invest in an S&P 500 index fund are big advantages, there are potential disadvantages to bear in mind.
Hasler continued: “There are also some potential disadvantages to consider though; an index fund will never outperform the benchmark by any significant margin, you will inevitably, at points, end up owning stocks that are very expensive, or you don’t like, and the concentration of the index means performance can be dominated by a few big stocks.”
In February, the S&P 500 index consisted of 504 stocks, of which the top 10 by weight accounted for 37.4% of the index. Of these, nine are information technology stocks, making up 35.6% of the index.
“These figures are not necessarily good or bad, but investors should be aware that in buying an index of 500 stocks they may not be getting quite as much diversification as they first thought,” Hasler said.
Diversification is a vital part of building your investment portfolio. When you are exposed to many different industries and firms, it means that if one area starts to perform poorly, your entire portfolio won’t decline with it.
As Hasler notes, the S&P 500 has a lot of exposure to tech stocks, so if they start to decline, so will your S&P 500 ETF and, by extension, your portfolio.
However, if you diversified and held 30% in the S&P 500, 40% in gold, and 30% in government bonds, then a downturn in tech would only directly affect the money in your S&P 500 ETF. Meanwhile, your gold and bonds would probably be far less affected, therefore mitigating the damage to your money.
What is the S&P 500’s all time high?
The highest value the S&P 500 has ever registered is 7,002, which it reached briefly on 28 January 2026. Between this high and market close on 20 February, the index has since fallen 1.3%.
Despite tumult resulting from the Covid-19 pandemic in 2020, the S&P 500 has been consistently climbing for the last decade, providing an annualised total return of 15.5% over the last ten years.
How to invest in the S&P 500
In order to invest in the S&P 500, you will have to buy shares in an ETF that mirrors the index.
Some popular ETFs include the Vanguard S&P 500 ETF (LON:VUAG), the iShares Core S&P 500 UCITS ETF (LON:CSP1) or the Invesco S&P 500 UCITS ETF (LON:SPXP).
Before you choose one, it is a good idea to shop around and see which S&P 500 ETF suits you best, as they will charge different fees and be configured in different ways.
While investing in a S&P 500 ETF is a safer way to grow your cash than wildly speculating, you are still able to lose money if the US stock market contracts.
While past performance is not indicative of future results, historically, whenever the S&P 500 fell it wasn’t long until it gained back the losses, and even grew further.
Can I invest in an S&P 500 fund if I am in the UK?
Yes, you can invest in S&P 500 tracker funds if you are in the UK despite it being an American index. However, you should be aware that investments into it will be made in USD rather than GBP, exposing you to exchange rate risk.
The closest equivalent to the S&P 500 that the UK has is the FTSE 100 or FTSE 250. If you are keen to invest your money in UK stocks rather than ones across the pond then you may want to research these indices further.
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