Which S&P500 tracker

dont_use_vistaprint

Cus said:

dont_use_vistaprint said:

Secret2ndAccount said:

 Vanguard S&P500 UCITS ETF   is not a sufficient description to know exactly which fund you are buying. It's available in income or distributing forms, and can also be bought in £ or directly in $. I'm going to assume you are looking at VUAG which is an accumulating version, priced in £ and is therefore comparable to UBS S&P500 Index C
A simple search on the Vanguard site tells you that they use exact replication. When you buy the ETF, they go out and buy all 500 onstituents in the appropriate proportions. This should lead to accurate tracking of the index, but creates a lot of cost. You don't care as long as the charges to you are low.
The UBS fund says that the manager can use derivatives. Rather than sell a share today, which it expects to buy back tomorrow, the manager can hold on to the share, but purchase insurance against an unexpected outsize move in the share.
There is no way of knowing whether one method of replication will prove to be better than another. Any tracking error might work in your favour or against you. Over any decent length of time, the effect is tiny.

Over 5 years, the trajectory of both has been identical. Both have doubled your money, and are within .15%. That is down to the higher charges of the UBS fund - you can see it slowly falling behind.
So if you want my advice, buy the one with the lowest charges.

As to S&P500 as an investment, I think it's a great investment. Take 500 of the world's largest and most succesful companies. Almost all are profitable. The majority expect to increase profits year on year. Many have global reach, trading in multiple currencies and countries. ASML is a Dutch company, critical to the manufacture of semiconductors. They do business all over the world. Dutch, international, but listed on the S&P because America provides a positive tax and regulatory environment to allow businesses to grow.
I do not favour an equal - weight approach. Do you think you should invest just as much in the Cintas Uniform Co as you do in Microsoft? MSFT has moved to the top by making large profits, then continuing to make large profits. If they stop doing that, they will fall down the league table and eventually be overtaken by CINTAS. It's good to have some money in the smaller companies because they may exhibit greater growth, but I wouldn't want to risk the majority on them while ignoring the already huge succesful companies.
Perhaps your biggest risk going with S&P is currency, since nobody can say where $ vs £ is going to go. You could gain 20% on the S&P but see the $ fall 20% against the £, leaving you with no profit. Or you could see the £ fall, and end up with a 40% gain. If this is a concern for you, you can find a hedged version that will return the movements of the S&P but priced in £ with no currency effects. Probably can't do this for 0.07% though...

I guess an equal weighted approach allows you to reduce some risk of big losses when the AI bubble bursts while still backing the worlds largest companies 

It's a valid thought. I can't identify why a company like Samsung, based on earnings, revenue, market share and the like, as a ratio to Apple's numbers is a lot more than compared to the ratio of their market caps.  My concern is that if a large reason is just due to location of the exchange they trade on,  then how long does that last?

Isn’t this understood through the quarterly earnings reports &  teleconferences, investors scrutinise things like supply chain, market forecasts etc 

Cus

My point is that imo, the assumption that the collective of all active investors that have all done this analysis and therefore the current price is a reflection purely of those factors does not take into account other factors like the weight of passive investing and the risk to anyone active if they are going against the herd.

dont_use_vistaprint

I take a fairly short term view with s&p500 investments , but right now it seems resilient to Trump, still excited about AI & in the wider context of interest rate drops it’s beating most of the forecasts for 2025 Q4 / year end. It’s having all my spare cash but it won’t be keeping it for too long 

dunstonh

I take a fairly short term view with s&p500 investments , but right now it seems resilient to Trump

US equities are the worst-performing major country/region this year by some margin.     

GazzaBloom

dunstonh said:

I take a fairly short term view with s&p500 investments , but right now it seems resilient to Trump

US equities are the worst-performing major country/region this year by some margin.     

Which is due to currency movement as the USD loses value against GBP. The S&P500 in USD is beating the FTSE100 in GBP YTD, so the equities themselves are performing well, UK investors in US equities are losing steam due to the current currency headwind. 

 But, even in GBP, the S&P500 is beating UK, EU & World indexes over 6 months, 12 months, 3 years and 5 years.

I'm sure there will be some "yeah buts" below...

dont_use_vistaprint

dunstonh said:

I take a fairly short term view with s&p500 investments , but right now it seems resilient to Trump

US equities are the worst-performing major country/region this year by some margin.

Well mine are all doing really well, way above expectations, consistently over the last 5 years. How other people’s investments are doing doesn’t really concern me.