The S&P 500 is a list of 500 large US companies, with one number that tracks their combined value. Take $100 put into a fund that follows it in October 2016. By September 2026, it had grown to $417.
A fund pools money from its investors to buy shares. The $417 counts dividends, the cash companies pay their shareholders. This guide covers what the index measures, what it has returned and how to invest in it, wherever you live.
What is the S&P 500? The S&P 500 is a stock market index of 500 leading US companies, run by S&P Dow Jones Indices. Each company counts in proportion to its market value: its share price times the shares available to trade. Together they cover about 80% of the value of US shares available to buy.
Big companies count for more. On 1 October 2026, the ten biggest shareholdings in SPY (the S&P 500 exchange-traded fund, or ETF) made up 38.9% of its shares.
Dividends are the cash companies pay their shareholders. From October 2016 to September 2026, the index price alone turned $100 into $356. Counting dividends, $100 in SPY reached $417.
To invest, you open an account with an investment platform and buy an index fund. That is a fund holding the index's shares in the same weights. The S&P 500 funds in this guide charge from 0.03% to 0.0945% a year.
What is the S&P 500?
A stock market index is a list of shares with rules for how much of each to count. Its level is one number that rises and falls with the value of those shares. The S&P 500 is run by S&P Dow Jones Indices. On 24 September 2026, it closed at 7,704.13.
It holds 500 companies. A few, such as Alphabet, have two classes of share in the index. So State Street, which runs the SPY fund, lists 503 holdings for the index on 1 October 2026. A holding is one line of shares. The index covers about 80% of the value of US shares available to buy, according to S&P Dow Jones Indices.
A committee at S&P Dow Jones Indices picks the members. Under its July 2026 rules, a company must be based in the US and worth at least $22.7 billion. It must also have made a profit in its latest quarter. Its latest four quarters added together must show a profit too.
How is the S&P 500 weighted?
The S&P 500 weights each company by its float-adjusted market value. That is the share price times the number of shares available to trade. A company worth twice as much counts twice as much.
Source: State Street Global Advisors; YX Insights
Chart 1 uses SPY's holdings list from 1 October 2026. Its largest 10 holdings made up 38.9% of the fund's shares. Holdings 11 to 50 added 25.3%. So the top 50 held 64.2%. Holdings 51 to 100 added 12.0%. Everything from holding 101 down made up 23.8%. The four groups add up to 100%. Nvidia alone outweighed the 250 smallest holdings put together.
Our 64.2% counts holdings in SPY in October 2026. S&P Dow Jones Indices counts companies. It puts the 50 largest at around 60% of the index in June 2025. Their average since December 1970 was 51%. Either way, the biggest companies carry more weight than their long-run average.
S&P 500 returns by year, through SPY
The return of a fund that tracks the index is its price change plus the dividends it pays.
Source: YX Insights price data
Chart 2 shows SPY's return in each calendar year from 2017 to 2025, with dividends counted. It rose in seven years and fell in two. The best year was 2019, at 31.2%. The worst was 2022, when it lost 18.2%. In 2026, it was up 13.4% by 24 September.
Over the ten years from 3 October 2016 to 24 September 2026, SPY returned 15.4% a year with dividends counted. That is the $100 to $417 in the opening.
The S&P 500 with dividends vs without
The S&P 500 level, such as 7,704.13, is a price index. It tracks share prices only and leaves dividends out. S&P Dow Jones Indices also publishes a total return version, which adds the dividends back.
Source: FRED (SP500); YX Insights price data
Chart 3 starts both lines at $100 on 3 October 2016. By 24 September 2026, the price index alone reached $356. SPY, with dividends counted, reached $417. That is 13.6% a year for the price alone. With dividends, it is 15.4% a year. The gap is 1.8 percentage points a year. SPY's line also has its 0.0945% yearly fee taken off. So dividends alone added a little more than 1.8 percentage points a year.
How to invest in the S&P 500: US, UK, Europe and elsewhere
To invest, you need an account with an investment platform, a firm that holds shares and funds for you. Then you buy a fund that tracks the index, found by its name or ticker, a short code such as SPY. Our guides to index funds and what an ETF is explain how they work.
In the US. In a taxable account, dividends and gains are taxed. Retirement accounts, such as an individual retirement arrangement (IRA) or a workplace 401(k), carry tax benefits. An index mutual fund is bought from the fund and sold back to it, at the next price it calculates. Vanguard 500 Index Admiral Shares charge 0.04% a year, with a $3,000 minimum. An ETF trades on an exchange all day. SPY charges 0.0945% a year. iShares Core S&P 500 ETF and Vanguard S&P 500 ETF charge 0.03%. Index funds vs ETFs compares the two.
In the UK. The Financial Conduct Authority, the UK regulator, says a fund from abroad can be marketed to UK retail investors only if it is a "recognised scheme". It says no US funds currently are. One Ireland-based fund is iShares Core S&P 500 UCITS ETF. It follows European fund rules called Undertakings for Collective Investment in Transferable Securities (UCITS). It trades in London, charges 0.07% a year and can be held in a Stocks and Shares ISA. An Individual Savings Account (ISA) lets UK residents aged 18 or over invest free of tax.
In the EU. European Union (EU) rules on packaged retail investment products cover funds. Before a fund is sold to a retail investor, the investor must be given its key information document. iShares Core S&P 500 UCITS ETF publishes one. It trades in euros on exchanges such as Euronext Amsterdam. Tax-favoured accounts differ by country.
Elsewhere: what to look for. The same checks work anywhere:
The fee. The funds in this guide charge 0.03% to 0.0945% a year.
How closely its return has matched the index.
Where it is based. US funds pay dividends to holders abroad after 30% US tax by default. A tax treaty with the holder's country can lower this, to 15% for UK residents. An Ireland-based fund usually pays 15% US tax on its US dividends, according to State Street.
What it does with dividends. Distributing funds pay them out. Accumulating funds reinvest them.
Its currency and exchange. One fund can trade in several. iShares Core S&P 500 UCITS ETF trades in pounds and in dollars in London.
Local tax accounts. Each country sets its own.
Risks of investing in the S&P 500
Falls. SPY lost 33.7% from 19 February to 23 March 2020, with dividends counted. The index carries the risk of the whole US market falling.
Concentration. With 38.9% in ten holdings, a fall in a few of the largest companies moves the whole index. One sector is large too. Information Technology made up 39.96% of the index on 1 October 2026, according to State Street.
One country. The index holds US companies only.
Currency. The index is priced in dollars. From 3 October 2016 to 24 September 2026, the pound rose 2.9% against the dollar. Over that window, SPY returned 15.4% a year in dollars. In pounds, it returned 15.1% a year. A falling pound would have lifted it.
How to read S&P 500 numbers
Use %, not points. A 77-point move is 1% at a level of 7,704.13.
Read one year with the ten-year record. Single years ranged from a loss of 18.2% to a gain of 31.2%. Over the ten years, SPY returned 15.4% a year. For what moves the index on a single day, see Why Is the Stock Market Down Today?
The S&P 500 is an index of 500 large US companies, weighted by size, so its ten biggest holdings made up 38.9% of SPY. You invest in it by buying an index fund that tracks it, through an account with an investment platform. The account and the fund's version depend on where you live.
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DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.