We will discuss in detail on S&P 500 Index funds and the Best S&P 500 Index Fund India available for investors.
What is the S&P 500 :
S&P 500 was the first ever Index Fund launched in the world in 1975 by the Vanguard. It is largest and most popular index in the world today . If you look at Largest Funds by AUM today, 3 out of four of the largest funds today in the world are on S&P 500 . Almost 10 trillion dollars of money is benchmarked with the S&P 500 Index fund.
Why is it Important:
Compare S&P 500 with Indian economy , our economy today is about 2.723 trillion dollars , S&P 500 today is 3 times the size of the Indian economy .
How has S&P 500 outperformed Nifty 50 and Nifty 500 by a large Margin.
When we talk about U.S. markets there are predominant two ways to track market and to take exposure
- You invest in a tech centric portfolio
- You invest in sector agnostic portfolio like a NASDAQ 100. When we say Sector Agnostic , It should not be sector biased in Nature.
Tech Agnostic Portfolios have given you more return in the last 10 years but they come with high risk and volatility.
Sector Agnostic portfolio will give you less return but comes with lower risk and less volatility.
S&P 500 Index consists of Mega CAP companies which are listed and are domiciled in US from different sectors across board ranging from IT , consumer staples , consumer discretionary to financial services , energy and industrials.
These mega cab companies are probably most well-known companies globally, we are very much aware of them and they are setting benchmarks for others to follow.
E.g. of companies in S&P 500 are companies like Apple , Microsoft, Cisco ,Pfizer , Johnson & Johnson If you look at financial systems it has companies like JPMorgan, Wells Fargo and Berkshire Hathaway
In the last ten years, it has outperformed Nifty 50 by 10.1% and in last 2-3 years, It has also given double digit excess returns over Nifty 50 . For Investors who want to take exposure in global markets like US, this can be a very good fund, its delivering Higher Alpha and it keeps all other Ratios intact.
Why should we take it very seriously:
Big reason would be investors today are choosing to diversify with international portfolio. An average Indian investor only has access to 3% of the world GDP , he’s missing out on the 96 to 97% of GDP that could be called from international investing . We are extremely small and it’s important to understand that with world economy interlocked , we must invest in global markets.
Investment in S&P is super simple , every US investor today has a S&P 500 Index folio , This is passive investing style and need not be managed by any Fund Manager. Expense Ratio and other expenses in this fund are less compared to actively managed Funds.
Best S&P 500 Index Fund India:
- Mirae Asset S&P 500 TOP 50 ETF : The Mirae Asset S&P 500 Top 50 ETF is a passively managed Index Fund and invests in Top 50 companies in the S&P 500 Index. Investments in stocks would be in a proportion to the weights of these stocks in S&P 500 Top 50 Index. A part of the this Fund would be invested in debt and money market instruments so that liquidity can be maintained.
- Motilal Oswal S&P 500 index fund (motilal-oswal-s&p-500-index-fund) : Motilal Oswal S&P 500 Index Fund would be investing in all 500 stocks in S&P 500 Index . Much of the proportion would be replicated to what S&P 500 Index has to these Stocks.
Indian Investors must invest in S&P 500 Index Funds which is the leading Index in world Market.
Hope you liked our Article , Please read our other articles on “Should You Invest in Cryptocurrency or Stocks” https://equitygyan74899394.wordpress.com/2021/11/04/should-you-invest-in-cryptocurrency-or-stocks/