An index fund such as the S&P 500 index fund is a cost-effective way to invest in all the stocks constituting the index. For example, if you want to buy all the stocks that are part of an index, the simplest way to do so is to buy an index fund. Famous billionaire investor Warren Buffet also advocates investing in an index fund, such as the S&P 500 index fund, to build wealth. This article discusses the top-5 S&P 500 index funds that you can buy and hold for the long term to grow your wealth.
1. iShares Core S&P 500 ETF (NYSE: IVV)
The iShares Core S&P 500 is an exchange-traded fund that is listed on the New York Stock Exchange (NYSE) under the ticker symbol IVV. The assets under management of the fund amount to $283 billion as of May 10, 2022. It charges a management fee of 0.03% and has an expense ratio of 0.03%. The fund closely tracks the returns of the S&P 500 index. The top-3 holdings of the fund include Apple, Microsoft, and Amazon.
2. Vanguard S&P 500 ETF (NYSE: VOO)
The Vanguard S&P 500 ETF also closely tracks the returns of the S&P 500 index. The fund’s total net assets as of May 10, 2022, were $841 billion, making it one of the largest index funds. Since its inception in 2010, the fund generated an average annual return of 15.33% against the annual average return of 15.37% generated by the benchmark S&P 500 index. The fund’s expense ratio is 0.03%, similar to the iShares Core S&P 500 ETF.
3. SPDR S&P 500 ETF Trust (NYSE: SPY)
The SPDR S&P 500 ETF Trust was launched in January 1993 and seeks to replicate the returns of the S&P 500 index. As of May 10, 2022, the funds’ assets under management amounted to $362 billion. Since its inception, the fund has generated an average annual return of 10.37%, compared with the return of 10.5% generated by the S&P 500 benchmark index. Because the fund aims to mimic the returns of the S&P 500 index, it has a similar composition and weights of stocks as the benchmark index.
4. Schwab S&P 500 Index Fund (MUTF: SWPPX)
The Schwab S&P 500 Index Fund is a mutual fund that aims to track the returns of the S&P 500 index. The fund was launched in May 1997 and now holds total net assets of $61 billion. Like other index funds, the fund also has a passive investment management strategy, which makes it a low-cost fund. It has a net expense ratio of 0.020% and does not have any minimum initial investment requirement.
5. Fidelity 500 Index Fund (MUTF: FXAIX)
The Fidelity 500 Index Fund (FXAIX) is a mutual fund by Fidelity that tracks the returns of the S&P 500 index. The fund was launched in 1988 and has a low expense ratio of 0.015%. Since its inception, the fund has generated an average annual return of around 10.66% against the S&P 500 benchmark return of 10.79%.
