What Are The Best S&P 500 Index Funds?

article Investing

What Are The Best S&P 500 Index Funds?

article Investing

Planning to invest in S&P Index Funds in 2021? Looking for the best options to consider? Then, this post will guide you well. Here, we have enlisted the best S&P Index funds for 2021.

When it comes to choosing an investment instrument that promises immediate diversification, mitigated risks, and reduced costs of investing, index fund is the market’s favorite.

One of the best index funds is based on the Standard & Poor’s 500 Index (S&P 500). As S&P 500 index funds include a plethora of globally variegated American companies across each enterprise, they are a low-risk investing stock. Seasoned traders as well as new investors are usually eager to invest their money in S&P 500 index funds because they receive a diverse portfolio, that too, at the marginal cost. If you are also on the same page, then this post will certainly help you out a lot.

But before heading to the list, let’s understand briefly what exactly are ‘S&P 500’ and ‘index funds’!

What Is The S&P 500 Index?

The ‘Standard & Poor’s 500 Index’, or simply the ‘S&P 500’, is a stock market index used to measure the stock performance of 500 large-cap U.S. companies listed on the stock exchanges. These listed companies make up 80% of U.S. equity. S&P 500 Index is one of the most prevalently followed equity indices and is often considered as “the market” because of the inclusion of stocks that are stretched to all market sectors.

Calculation For S&P 500

As the S&P 500 utilizes a market-capitalization-weighted method, the formula for calculating it is as follows:

Company Weighting in S&P=(Company Market Cap)/(Total of all Market Caps)

What Is The Index Fund?

An ‘Index Fund’ is a mutual fund that imitates a stock market index like BSE Sensex, NSE Nifty, etc. They have also been known as ‘index-tied’ or ‘index-tracked’ mutual funds. As index funds are not actively managed, they incur lower costs and generate higher returns than the actively managed funds.

Their primary aim is to maintain uniformity in the market rather than outperforming the market. Choosing the best index funds can help an investor to keep his/her risks in the investment portfolio equitable.

Key Qualities of the Best S&P 500 Index Funds

You should look for the funds that have:

  1. Lower Expense Ratio: One of the most important aspects of index fund investing is lower investment costs.
  2. High AUM (Assets Under Management): An index fund having a high AUM doesn’t only indicate the quality of the assets but also the benefits, especially when we talk about liquidity in ETFs.
  3. Close & Precise Index Tracking: The index fund that delivers top-notch performance by closely tracking the index brings out extensive positive results.

Topmost S&P 500 Index Funds in 2021

Now, let’s have a look the best S&P Funds for the year:

1. Vanguard 500 Index (VFIAX)

Beginning its trade in 2010, Vanguard 500 Index is the pioneering fund in the market that exposes your portfolio to a plethora of mega-cap U.S. companies, such as NVIDIA Corp., Microsoft, and Mastercard. With hundreds of billions in the fund, Vanguard’s S&P 500 Index Fund is a good fit available for various investors. Let’s look at some of its data:

  • Expense Ratio: 0.04%
  • P/E Ratio: 25.7
  • Annual Dividend Yield: $5.35 Per Share
  • Total AUM: $157 Billion
  • Shares Per Day: Above 169,818
  • 1-Year Return Rate: 11.42%
  • 3-Year Return Rate: 38.28%
  • 5-Year Return Rate: 76.85%

Besides, Vanguard created VFIAX (the Admiral Shares Fund) fortunately, which has a lower expense ratio of 0.04% as compared to the older share funds.

2. SPDR S&P 500 (SPY)

The SDPR S&P 500 is one of the largest and popular ETFs in the world. Launched in January 1993, the fund is sponsored by State Street Global Advisors, which gives us the reason why it is also one of the world’s most heavily-traded and best index funds. With thousands and billions of funds, SDPR S&P 500 has brought a paradigm shift in the investing world by kick-starting the wave of ETF investing. Have a look at some of its data!

  • Expense Ratio: 0.09%
  • P/E Ratio: 24.3
  • Shares Per Day: Above 93 Million
  • AUM: $278 Billion
  • Annual Dividend Yield: $5.68
  • 1-Year Return Rate: 11.445
  • 3-Year Return Rate: 38.09%
  • 5-Year Return Rate: 76.21%

3.     iShares Core S&P 500 (IVV)

Sponsored by one of the largest fund companies, BlackRock, the iShares Core S&P 500 ETF is a long-tenured index fund that was incepted in 2000. From Johnson & Johnson, Alphabet, to Berkshire and Hathaway, iShares Core S&P 500 index fund gives you a plethora of golden exposures to large and established U.S. companies. For investors who are looking to buy-and-hold the stocks, this ETF can prove extremely fruitful in the long run. iShares Core S&P 500 has:

  • Expense Ratio: 0.04%
  • P/E Ratio: 22.35
  • Shares Per Day: Above 87,561
  • Total AUM: $209 Billion
  • Annual Dividend Yield: $6.77 Per Share
  • 1-Year Return Rate: 11.62%
  • 3-Year Return Rate: 38.64%
  • 5-Year Return Rate: 76.30%

4. Fidelity ZERO Large Cap Index (FNILX)

In the competition for the lowest of the low-cost index funds, the Fidelity ZERO Large Cap Index undoubtedly wins the race. With a zero expense ratio, the Fidelity fund follows the Fidelity U.S. Large Cap Index and allows the investors to keep their invested cash intact for the long-term. Let’s have a look at some of its data:

  • Expense Ratio: 0%
  • Minimum Investment: No Bar
  • Turn Over: 3%
  • 52 Week Average Return: 22.24%
  • Yield: 1.20%

5. Schwab S&P 500 Index Fund (SWPPX)

Launched in 1997, the Schwab S&P 500 Index Fund is one of the cheapest and easily accessible S&P 500 tracking funds in the market. Sponsored by Charles Schwab and with thousands of billions of assets, Schwab funds are primarily famous for generating investor-friendly stocks. This mutual fund has:

  • Expense Ratio: 0.02%
  • Turn Over: 4%
  • Minimum Investment: $0
  • Yield: 1.81%
  • 52 Week Average Return: 19.65%
  • 1-Year Return: 19.65%
  • 2-Year Return: 13.63%
  • 3-Year Return: 16.62%

6. Invesco S&P 500 Equal Weight ETF

From Darden Restaurant, Twitter, to Lam Research Corp., Paycom Software, and FedEx, the Invesco S&P 500 Equal Weight ETF gives your portfolio multi-exposures to various companies in the U.S. Just have a look at the following data of the fund:

  • Expense Ratio: 0.20%
  • P/E Ratio: 18.94
  • Annual Dividend Yield: $2.12 Per Share
  • Total AUM: $13 Billion
  • Shares Per Day: Over 102,433
  • 1-Year Return Rate: 3.01%
  • 3-Year Return Rate: 23.29%
  • 5-Year Return Rate: 53.73%

7. Fidelity 500 Index Fund (FXAIX)

Formerly, ‘Institutional Premium Class Fund’, the Fidelity 500 Index Fund was founded in 1988. In the later years, Fidelity eliminated the minimum investment eligibility condition, so investors can easily get the low-cost index fund within budget. Some of its stats are:

  • Net Expense Ratio: 0.02%
  • TurnOver: 4%
  • Yield: 1.60%
  • 52 Week Average Return: 19.66%
  • Minimum Investment: $0
  • 1-Year Return: 19.66%
  • 3-Year Return: 13.65%
  • 5-Year Return: 16.67%

Closing words

Opting for the best S&P 500 index funds can let you leverage the benefits of diversification as well as mitigated risks. In general, the S&P 500 index fund with the lowest expense ratio is the best one. However, you should also consider various other factors, such as tracking error, assets under management, and past performances.

Sometimes the S&P 500 index funds could have sturdy holdings in the portfolio, but they might not be the right or the best choice for the investors. You can choose us as your investment consultant so that we can suggest the best investment based on your risk appetite. To learn more about the best S&P 500 Index Funds, visit https://wealthface.com/ today!

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