S&P 500 ETFs

(David Lynan) #1

Good afternoon all

Please forgive my ignorance but after reading/researching many articles and guides I believe the general idea for my situation at least is for my portfolio to be made up of at least 50% ETF’s. I’m planning on starting to build with a lump sum then investing £200 per month in the portfolio eventually including bonds, individual stocks and a cash reserve. My question is of the 2 S&P 500 ETF’s available on Freetrade how is it decided which companies make up the ETF’s. For example is it just like a smash and grab where if one has for say Apple the other can’t contain it or could they if they so wanted contain the exact same companies? Reason is I’m unsure wether to invest in both or just focus on building up on one of them. Again sorry for the dumb question

Thanks in advance.

(Emma) #2

They’re both S&P 500 so both contain the 500 companies (or at least aim to).

Both have a Key Information Document which is worth a read to figure out what the aim is.


They both have all 500, they buy them like we do… but the differences is usually the weighting, fees and some other bits.

But you’ll be getting a slice of all 500 with both iStocks and Vanguard

(David Lynan) #4

Thanks both for the information

(Harry) #5

Main difference will be the way they are constructed, I.e exact replication or designed to mimick the index, which could be cheaper but involve tracking error.

I invested in S&P as the units are cheaper, easier for me to construct a portfolio.


To directly answer your question, the managers of both of these exchange traded funds have decided that they will invest their shareholder’s money by buying stocks to match as closely as possible the index they are tracking. Both chose to track the index published by Standard & Poor, called the S&P 500, which contains the top 500 publicly traded companies in the US, weighted by their cap (size).

So basically some independent entity looks at the companies on the stock market and based on some rules, publish a list. Then other people can choose to try and replicate the contents of the list when they invest.


Try this article

Hope this helps