Should You Just Buy the S&P 500?

Ask around any UK investing forum and one idea keeps coming up: forget the FTSE, forget picking funds — just buy America and be done with it. For over a decade that would have worked beautifully. But "the easy winner so far" and "the right thing to hold forever" are not the same sentence, and the gap between them is where this decision actually lives.

Why it's tempting

The pull is real. Over the long run the S&P 500 has returned roughly

**10% a year in nominal terms, about 7%

after inflation**, and a UK investor can now own the whole index for almost nothing — trackers charging as little as

**0.03% to 0.07% a year**, held

tax-free inside a Stocks & Shares ISA. There's even a "you already own it" argument: the US now makes up

**around 65% of the world's stock market by

value**, so any global fund is mostly America anyway.

The catch: one country, a few giants

Here's what "just the S&P 500" quietly signs you up for. First, a single country's economy, currency and politics. Second, and less obvious, extreme concentration inside that index: the seven largest companies are now about 32.5% of the S&P 500, with the top ten near 40%. Buying "500 companies" sounds diversified; in practice a big chunk of your money rides on a handful of technology names. A global tracker holds the same US giants but spreads the rest across thousands of other companies for a similar low fee.

Then there's currency. You earn and spend in pounds, but an S&P fund pays off in dollars. If the dollar weakens against sterling, your return shrinks even when US shares rise — a swing that has nothing to do with how the companies performed.

An illustration, not a forecast

Zoom out to the widest lens and global equities have delivered roughly

**5.2% a year above inflation since

1900**, with genuinely brutal stretches inside that average — US shares went nowhere real for the decade from 2000 to 2009. The point isn't that America will stop leading. It's that a decade of one thing winning is exactly the conditions under which people bet everything on it right before the weather changes. Past performance is no guide to future returns.

Our take

For most people, a broad, low-cost tracker inside an ISA is a sensible core — and the honest debate is simply S&P 500 versus a global tracker, not index versus stock-picking. We lean global: same giants, less single-country and single-currency risk, for almost the same fee. The fair counter-argument is that America has outperformed for real reasons — superior profit growth, led by tech — and a global fund is two-thirds US regardless. Either way, use the £20,000 ISA allowance first, keep costs near zero, and decide your US weighting on purpose rather than by drifting into the crowd's favourite.

Sources & further reading

Lord Abbett, US share of global equities (Aug 2025)
Forbes, S&P 500 Magnificent Seven weight (Jun 2026)
justETF UK, low-cost S&P 500 ETFs
FinanceWonk, S&P 500 historical returns 1928–2026

Educational content only — not financial advice. Investments can fall as well as rise; capital at risk. Past performance is no guide to future returns. Figures checked July 2026.