Investing In The S&P 500 - S&P 500 Index Tracking Fund Options

I was recently discussing with a family member (29) an inheritance that they received a couple of years ago. Upon receipt it was split three ways and placed into three different financial institutions with the best one year fixed bonds available at the time. At the end of the year, they were undecided what to do with the money and again reinvested (last year) for one year in fixed rate bonds. The three bonds are now due to mature and they have been looking to invest the money with a view to not touching it for 10 to 20 years. This is when the subject of the S&P 500 came up, which I was advised was somewhere their peer group invested in. From what I can see, there are associated S&P 500 Index tracking fund options, but I am not seeing funds that have mimicked the S&P 500 performance over the past 5 years? So I guess I am looking for advice on how I can best research investing in the S&P 500? To explain their situation going forward, UK citizen, non UK tax payer, digital nomad, financially stable, no personal pension, access to rainy day funds, no plans to settle in any given country, visits family in UK but does not anticipate living in the UK in years to come. 

I also have an interest in the subject and It goes without saying that S&P 500 Index tracking funds may well just be just one option/investment, so I am open to any suggestions or feedback along with recommended reading material for us both. Thanks.
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  • dunstonh
    dunstonh Posts: 115,716
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    So I guess I am looking for advice on how I can best research investing in the S&P 500?
    One assumes you are doing this to meet your US allocation of your portfolio and not doing the silly thing of going 100% into it with no global exposure.

    From what I can see, there are associated S&P 500 Index tracking fund options, but I am not seeing funds that have mimicked the S&P 500 performance over the past 5 years?
    You would need to be currency hedged to get closer to it.   Most funds are in Sterling and you get currency movements influencing it.



    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • JohnWinder
    JohnWinder Posts: 1,717
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    From what I can see, there are associated S&P 500 Index tracking fund options, but I am not seeing funds that have mimicked the S&P 500 performance over the past 5 years?
    Would three years do? The Vanguard UK fund tracking the SP500 has had higher returns than the index for each of the last three years. https://www.vanguardinvestor.co.uk/investments/vanguard-s-and-p-500-ucits-etf-usd-accumulating/price-performance 
    More importantly, how smart or otherwise is the peer group?
  • cardriver98
    cardriver98 Posts: 38
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    if you dont need the money and its a sizeable chunk £50k ?  premium bonds are worth considering.  did that with mine 12 months ago, and have had decent wins EVERY month,  
  • george4064
    george4064 Posts: 2,792
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    if you dont need the money and its a sizeable chunk £50k ?  premium bonds are worth considering.  did that with mine 12 months ago, and have had decent wins EVERY month,  
    If the money is not needed then the sensible thing would be to invest it in a globally diversified portfolio rather than keep it in safe premium bonds, depending on attitude to risk.
    "If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” Warren Buffett

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  • InvesterJones
    InvesterJones Posts: 638
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    If looking at a 20 year time frame then it's a bit of a performance risk to put it all into one country, well as the US has done in recent times. A cheap global tracker is usually the preferred set and forget investment for equity portfolios. Given the lack of need to access this investment in the short term premium bonds would not be recommended due to opportunity loss (if they're even available to non-UK residents).
  • Nebulous2
    Nebulous2 Posts: 5,065
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    The S and P 500 has done remarkably well in recent times. Particularly in dollar terms rather than pound ones.  Markets that go through a period of outperformance often then go through a period of underperformance. 

    Are you, your relative and his peers confident it will continue to do well? 

    While its about drawing down pensions rather than investing - this video that was posted on the pensions forum may be of interest. 

    https://youtu.be/eIUgjib_fm4

  • TojoRalph
    TojoRalph Posts: 97
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    dunstonh said:
    So I guess I am looking for advice on how I can best research investing in the S&P 500?
    One assumes you are doing this to meet your US allocation of your portfolio and not doing the silly thing of going 100% into it with no global exposure.

    From what I can see, there are associated S&P 500 Index tracking fund options, but I am not seeing funds that have mimicked the S&P 500 performance over the past 5 years?
    You would need to be currency hedged to get closer to it.   Most funds are in Sterling and you get currency movements influencing it.



    Therein lies the problem as I see it, they would be going all in to S&P 500 funds, or at least a large percentage of their monies reliant on the US economy performing. Ultimately they want to invest and forget and be assured (if there is such a thing) of a reasonable return long term. Any suggestions as to how that might be achieved are welcome.
  • TojoRalph
    TojoRalph Posts: 97
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    From what I can see, there are associated S&P 500 Index tracking fund options, but I am not seeing funds that have mimicked the S&P 500 performance over the past 5 years?
    Would three years do? The Vanguard UK fund tracking the SP500 has had higher returns than the index for each of the last three years. https://www.vanguardinvestor.co.uk/investments/vanguard-s-and-p-500-ucits-etf-usd-accumulating/price-performance 
    More importantly, how smart or otherwise is the peer group?
    I think it's fair to say that they have their head screwed on, however both they and their peer group are going to be far less risk averse and old school than I am in their approach to investing. How smart their peer group is I dont really know. I will look at the Vanguard fund as an option, as ultimately I think they will go down the S&P 500 route with at least part of their inheritance. I say that because its clear that they should be a little more diverse with any investments.
  • dunstonh
    dunstonh Posts: 115,716
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    edited 4 January at 12:56PM
    TojoRalph said:
    dunstonh said:
    So I guess I am looking for advice on how I can best research investing in the S&P 500?
    One assumes you are doing this to meet your US allocation of your portfolio and not doing the silly thing of going 100% into it with no global exposure.

    From what I can see, there are associated S&P 500 Index tracking fund options, but I am not seeing funds that have mimicked the S&P 500 performance over the past 5 years?
    You would need to be currency hedged to get closer to it.   Most funds are in Sterling and you get currency movements influencing it.



    Therein lies the problem as I see it, they would be going all in to S&P 500 funds, or at least a large percentage of their monies reliant on the US economy performing. Ultimately they want to invest and forget and be assured (if there is such a thing) of a reasonable return long term. Any suggestions as to how that might be achieved are welcome.
    US equities have been strong over the last 15 years.    This is in part due to the events in the 15 years prior to that.    That previous cycle saw US equities amongst the worst countries/regions of the world for UK based investors.   Partly on the back of the original dot.com crash and partly due to rising Sterling.     Those two things pretty much went the opposite way in the last 15 years.   

    Far too many people are looking at recent data and thinking that is the norm.   It is not.   Global equity trackers for the equity content would be a more suitable mix.    By its very nature, it will have a high US equity content but it will also include the rest of the world.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • ColdIron
    ColdIron Posts: 8,677
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    TojoRalph said:
    no personal pension ... does not anticipate living in the UK in years to come.
    Putting all your eggs in a single geography basket is a very high risk strategy and about as far as you can get from the current cash deposits in use
    Of the issues above the first would be at the top of my list and the second a significant hurdle to overcome
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