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Should I invest in the S&P 500?

17/11/2022

In the first nine months of 2022, the US S&P 500 stock index lost 24%. In its full history, there have been only five years where the full year’s result has been worse than 2022 to date.

Does this mean, though, that investors should steer clear? 

 

What is the S&P 500? 

The Standard & Poor’s 500 is an index of the leading 500 publicly-traded companies in the US. Launched in 1957, it is considered to be one of the best ways to gauge the performance of US stocks thanks to its diversity and depth. 

As an index, it is impossible to invest in the S&P 500 itself. However, investors can invest in S&P 500 mutual funds or ETFs, offered by a range of different providers. 

 

Will the S&P 500 pick up? 

The current picture for the S&P 500 looks bleak. However, experts predict, if the current bear market follows a similar pattern to previous bear markets, that those who stick with the S&P 500 could be rewarded. 

Charles Rotblut, Vice President at the American Association of Individual Investors, acknowledged in a recent tweet that the current bear market is well within the range of previous bears, highlighting how investors have gained from sticking with their S&P 500 investments during challenging times. 

Some have also highlighted that the S&P 500 regularly outperforms the FTSE 100. In the last 20 years, this US index has returned 158% in capital growth since the year 2000. With the S&P 500 containing some large global growth companies – especially compared with the FTSE 100 – a market preference for growth companies could potentially see the S&P 500 continuing to outperform its UK counterpart in the future. 

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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