S&P 500 Index Fund: What It Is, What It Costs and How to Buy One
Quick answer
An S&P 500 index fund is a mutual fund or ETF that holds the roughly 500 largest US companies in the same proportions as the S&P 500 index, so its return matches the market minus a small fee. The cheapest mainstream versions charge 0.015% to 0.04% a year, between $1.50 and $4 per $10,000 invested.
The main S&P 500 index funds compared (figures verified July 2026)
| Fund (ticker) | Type | Expense ratio | Minimum investment | Annual cost per $10,000 |
|---|---|---|---|---|
| Fidelity 500 Index Fund (FXAIX) | Mutual fund | 0.015% | None | $1.50 |
| SPDR Portfolio S&P 500 ETF (SPYM, formerly SPLG) | ETF | 0.02% | One share, or fractional at most brokerages | $2 |
| Schwab S&P 500 Index Fund (SWPPX) | Mutual fund | 0.02% | None | $2 |
| Vanguard S&P 500 ETF (VOO) | ETF | 0.03% | One share, or fractional at most brokerages | $3 |
| iShares Core S&P 500 ETF (IVV) | ETF | 0.03% | One share, or fractional at most brokerages | $3 |
| Vanguard 500 Index Fund Admiral Shares (VFIAX) | Mutual fund | 0.04% | $3,000 | $4 |
Step by step
- 1
Choose the account before the fund
Decide where the money lives first: a 401(k) if your employer offers one (especially with a match), an IRA for tax-advantaged saving outside work, or a taxable brokerage account for money beyond those limits. The account determines the tax treatment; the fund just determines what you own.
- 2
Open the account
A 401(k) is opened through your employer. IRAs and brokerage accounts can be opened online at any major US brokerage in a few minutes. Most 401(k) menus include an S&P 500 index fund even if it is not labelled with a famous ticker; check the expense ratio on the plan fact sheet.
- 3
Pick one fund from the table
Any fund in the table above gives near-identical S&P 500 exposure. The sensible tie-breakers are the expense ratio and whatever your platform lets you buy without a transaction fee. Mutual funds suit fixed dollar amounts; ETFs trade like stocks during market hours.
- 4
Buy it
For a mutual fund, enter a dollar amount and the order fills at that day's closing price. For an ETF, buy shares (or fractional shares) at the live market price. There is no need to time the purchase; the whole point of indexing is giving up on that game.
- 5
Automate the contribution
Set a recurring monthly investment and switch on dividend reinvestment. Automation removes the two most expensive habits in investing: forgetting to invest and deciding not to because of the news.
An S&P 500 index fund does one thing: it buys the roughly 500 largest US companies, weighted by size, and holds them. No manager picking winners, no view on the market, no activity to pay for. You get the return of corporate America's large-cap tier, minus a fee so small it rounds to a few dollars per $10,000 a year. Every figure on this page was verified against fund provider data in July 2026, and the ones that move (holdings weights, trailing returns) are date-stamped rather than presented as permanent truths.
The first-principles case is the fee, not the funds. Most actively managed US stock funds have historically failed to beat the S&P 500 after costs over long periods, which reframes the whole product category: an index fund is not a way to win, it is a refusal to pay for losing. Once you accept that, the six funds in the table stop being rivals and become the same product with different logos. The entire spread between the cheapest and the dearest is 0.025 percentage points a year.
One housekeeping note the older articles miss: SPLG, long the cheapest S&P 500 ETF, changed its ticker to SPYM at the end of October 2025. Same fund, same 0.02% fee, new letters. If a screener cannot find SPLG, that is why.
The ETF versus mutual fund question matters less than beginners fear. FXAIX, SWPPX and VFIAX are mutual funds: you invest exact dollar amounts and orders fill once a day at the closing price. VOO, IVV and SPYM are ETFs: they trade all day like stocks and have no dollar minimum where fractional shares are offered. VFIAX and VOO are literally share classes of the same Vanguard portfolio. Inside a 401(k) you will usually be offered a mutual fund; in a brokerage account either works. The full trade-off lives in our guide to index funds vs mutual funds vs ETFs. And if you are eyeing SPY, the original 1993 ETF, note that it charges 0.0945% for the same index; VOO vs SPY explains why that gap exists and who SPY still suits.
On returns, the honest framing has two halves. The S&P 500 has averaged about 10% a year since its 1957 launch, per Fidelity's published data, and about 14.8% a year over the decade to December 2025. But the average arrives in lurches: the index roughly halved in 2008-09, and long flat stretches are part of the historical record too. Past performance does not guarantee future results, and the sequence of returns matters as much as the average, especially near retirement. Dividends are the quieter half of the story; what VOO actually yields covers that.
The caveat worth printing on the label is concentration. As of 31 May 2026, the top ten holdings made up about 39% of the index by weight, with Nvidia and Apple alone accounting for roughly 15%. A fund of 500 companies is really a bet on ten companies wearing five hundred name badges. That is not a reason to avoid it, but it is a reason to know what you own; if you want the small and mid-cap tail included for the same 0.03% fee, VTI vs VOO walks through the total-market alternative.
If you are choosing your first fund rather than researching this specific index, our shortlist of the best index funds for beginners widens the frame to total US market and total world funds. More US-focused explainers live at our US articles hub, and you can stress-test growth assumptions with the calculators at the US tools hub. This page is general information, not personal investment advice: the value of any stock fund can fall as well as rise.
Frequently asked questions
What is the best S&P 500 index fund?
There is no meaningful winner, because every fund in the table holds the same 500-odd companies in the same proportions. The entire cost gap between the cheapest (FXAIX at 0.015%) and the priciest mainstream option (VFIAX at 0.04%) is $2.50 a year per $10,000 invested. The practical answer is whichever one your 401(k), IRA or brokerage lets you buy cheaply and automatically.
What if I invested $1,000 in the S&P 500 20 years ago?
At the index's roughly 10% historical average annual return with dividends reinvested, $1,000 compounding for 20 years grows to roughly $6,700 before tax. That is an illustration using the long-run average, not the actual path: the real 20 years included the 2008-09 crash, when the index roughly halved before recovering. Past performance does not guarantee future results.
Can I put $100 into the S&P 500?
Yes. FXAIX and SWPPX have no minimum investment, and most major US brokerages sell fractional ETF shares, so $100 buys a $100 slice of VOO, IVV or SPYM regardless of the share price. The main exception in the table is VFIAX, which requires $3,000 to open; its ETF share class, VOO, carries no such minimum.
What is the 10-year return on the S&P 500?
About 14.8% a year for the ten years to December 2025, per Fidelity's published data. That is well above the index's long-run average of roughly 10% a year since 1957, which is exactly why it should not be projected forward. Decade-long stretches have historically ranged from strongly negative to spectacular, and past performance does not guarantee future results.
How do I invest in the S&P 500 for beginners?
Three moves: pick the account (401(k) first if there is an employer match, then an IRA, then a taxable brokerage account), pick any low-cost fund from the table above, and automate a monthly contribution with dividends reinvested. The account choice affects your taxes for decades; the choice between near-identical 0.02% funds affects almost nothing.
What is the difference between the S&P 500 and an S&P 500 index fund?
The S&P 500 is just a list: an index of roughly 500 large US companies, weighted by market value, maintained by S&P Dow Jones Indices. You cannot buy a list. An S&P 500 index fund is the investable product that copies the list, holding the same stocks in the same weights, which is why its return tracks the index minus the fund's fee.
Are S&P 500 index funds a safe investment?
No stock fund is safe in the cash sense. An S&P 500 fund is diversified across roughly 500 companies, but it is 100% large-cap US stocks, and the index has historically fallen 30% to 50% in bad bear markets. It also carries no international stocks or bonds. Broad and cheap, yes; immune to loss, no. This is general information, not personal investment advice.
Sources
- Stock Analysis - VOO fund data and top-10 holdings weights (checked 6 July 2026)
- Stock Analysis - FXAIX fund data, expense ratio and minimum (checked July 2026)
- State Street - SPDR Portfolio S&P 500 ETF (SPYM) fund page (checked 6 July 2026)
- Fidelity - What is the S&P 500 average return? (average about 10% a year since 1957)
- Vanguard - VOO, Vanguard S&P 500 ETF fund page
General information, not financial advice. Tax rules and figures can change; check the current position on irs.gov or ssa.gov before acting.