The Standard & Poor's 500 Index (S&P 500) is an index of 500 of the largest U.S. companies, listed on the New York Stock Exchange or NASDAQ, selected by the Standard & Poor's Index Committee based on market capitalization. The S&P 500 Index is a widely recognized barometer of the U.S. equity market. S&P 500 Index funds allow investors to establish a core allocation in large-cap U.S. equities, which have been advised by one of the most iconic American investors, Warren Buffet, also known as the Oracle of Omaha. S&P 500 Index funds seek to replicate the performance of the benchmark index by investing in S&P 500 constituents with similar weights. These funds employ a passive or indexing investment strategy and invest all or a substantial amount of their total net assets in common stocks included in the benchmark index.
Vanguard 500 Index Fund Investor Shares
The Vanguard 500 Index Fund Investor Shares seeks to provide investment results corresponding to the price and yield performance of the S&P 500 Index, its benchmark index, with a high degree of positive correlation. VFINX was issued by Vanguard on Aug. 31, 1976, and has generated an average annual return of 11.01% since its inception, as of October 24, 2017. VFINX is managed by the Vanguard Equity Investment Group and charges an annual expense ratio of 0.14%, which is significantly lower than the average expense ratio of mutual funds with similar holdings.
To achieve its investment objective, VFINX implements an indexing strategy and invests nearly all of its total assets in stocks included in the S&P 500 Index, with approximately the same proportions as the weightings in the index.
As of October 24, 2017, the Vanguard 500 Index Fund has total net assets of $350.3 billion. End of September, VFINX had a price-to-earnings ratio (P/E ratio) of 22.3x; a price-to-book ratio (P/B ratio) of 3x.
The fund has a Sharpe ratio of 1.03; and standard deviation in line with that of the underlying benchmark at of 10.07%.
Like most S&P 500 Index funds, VFINX is best suited for long-term investors with a moderate to high degree of risk tolerance seeking exposure to the U.S. large-cap equities market. Since VFINX has a minuscule tracking error and a low expense ratio, it is an attractive core holding for an equity portfolio.
Schwab S&P 500 Index Fund
The Schwab S&P 500 Index Fund was issued on May 19, 1997, by The Charles Schwab Corporation. SWPPX is advised and managed by Charles Schwab Investment Management, Inc., and charges an expense ratio of 0.03%.
SWPPX is a mutual fund that seeks to provide investment results corresponding to the total return of the S&P 500 Index. To achieve its investment goal, SWPPX typically invests at least 80% of its total net assets in stocks comprising the S&P 500 Index. Additionally, SWPPX generally gives the same weights to these stocks as the index.
As of October 24, 2017, SWPPX has 508 holdings, which amount to $29.2 billion, and a portfolio turnover of 2%. As of September end, SWPPX had a beta of 1.0; an alpha of -0.07; a Sharpe ratio of 1.03; and standard deviation of 10.04.
Fidelity Spartan 500 Index Investor Shares
Issued on Feb. 17, 1988, by Fidelity, the Fidelity Spartan 500 Index Investor Shares provides low-cost exposure to the U.S. large-cap equities market. FUSEX charges an annual net expense ratio of 0.09% and requires a minimum investment of $2,500.
Since its inception, the fund has generated, 10.2% in annual average returns and interestingly, before fees and expenses, FUSEX has a perfectly positive correlation to the S&P 500 Index. To track the underlying index, FUSEX invests at least 80%, under normal market conditions, of its total net assets in common stocks comprising the index. FUSEX has historically tracked the index with a small degree of tracking error.
FUSEX serves as an alternative to VFINX and SWPPX, and is one of the top funds that offers exposure to a basket of common stocks included in the S&P 500 Index. FUSEX may serve as a core holding in a portfolio of U.S. equities.
T. Rowe Price Equity Index 500 Fund
The T. Rowe Price Equity Index 500 Fund (PREIX) was launched on March 30, 1990, and has since delivered an average annual return of 9.5%. The PREIX charges a net expense ratio of 0.21%. Tracking the S&P 500, the fund aims to match the investment return of large-capitalization U.S. stocks by seeking to match the performance of its benchmark index
As of October 24, 2017, the PREIX has total net assets of $29.2 billion. It may be best suited for investors seeking to gain exposure to U.S. large-cap equities market.