Best S&P 500 ETFs: Which Ones to Choose for Investing in 2025?
- Andrea Ferrante
- Mar 25
- 7 min read
S&P 500 ETFs are one of the most effective and popular options for investors looking to gain exposure to the US stock market through a single financial instrument. These ETFs replicate the S&P 500 index, which is made up of the 500 largest companies listed on US stock exchanges, covering a wide range of economic sectors such as technology, healthcare, finance and more.
One of the key benefits of S&P 500 ETFs is their ability to provide immediate and significant diversification in a portfolio, allowing investors to benefit from the collective performance of hundreds of companies without having to purchase each stock individually. This diversification helps reduce the risk associated with specific companies or sectors, promoting greater overall investment stability.
Throughout this guide, we’ll review the best S&P 500 ETFs available in 2025, analyzing historical performance, associated costs, index tracking strategies, and other crucial features to help you select the ETF that best suits your investment strategies.
What is the S&P 500 Index?
The S&P 500 Index is one of the world's largest and most widely followed stock market indices used by investors to gain exposure to the U.S. stock market. Created by Standard & Poor's, this index tracks the performance of the 500 largest large-cap companies listed on U.S. stock exchanges.
The S&P 500 is composed of leading companies in various sectors, including technology, finance, healthcare, and energy. The top positions in the index are usually occupied by giants such as Apple, Microsoft, Amazon, Alphabet (Google), Nvidia, and Tesla, highlighting the importance of the technology sector in the American economy. Here is the sector distribution of the index:
● Technology: about 30%
● Finance: about 13%
● Healthcare: about 13%
● Consumer discretionary: approximately 10%
● Industry: about 8%
● Energy: about 4%
● Other sectors: approximately 22%
Due to its broad coverage and representativeness of the U.S. market, the S&P 500 Index is considered a reference benchmark for those investing in the U.S. economy and the global stock market.
Why invest in an S&P 500 ETF?
S&P 500 ETFs are among the most popular investment tools in the world due to their ability to replicate the growth of the US economy with a single investment. They offer diversification, solidity and low costs, making them an ideal choice for those seeking an efficient and long-term oriented portfolio.
Investing in an S&P 500 ETF gives you exposure to the 500 largest companies listed in the United States, including giants such as Apple, Microsoft, Amazon, Alphabet (Google), Nvidia, and Tesla. This allows you to diversify your investment across sectors, including technology, financials, healthcare, consumer goods, and industrials, reducing the risk associated with specific companies or sectors.
Historically, the S&P 500 has averaged an annual return of 10-11% over the past few decades, making it one of the most profitable financial instruments compared to other forms of investment, such as:
● S&P 500 : 10-11%
● MSCI World Index : 9-10%
● Government bonds : 2-4%
● Deposit accounts : 1-2%
Even during times of financial crisis, the index has always shown remarkable resilience, thanks to the strength and innovation of American companies.
Another major advantage of S&P 500 ETFs is their low management costs compared to actively managed funds. The best ETFs on this index have a TER (Total Expense Ratio) that varies between 0.03% and 0.10% , while actively managed funds can have annual costs between 1% and 2%.
Let's take a practical example:
💡 Investing 10,000 pounds for 20 years, with a low-cost S&P 500 ETF (0.05%), you would only spend about 200 pounds in total fees. With an active fund (1.50%), the cost could rise to 4,000 pounds or more.
Thanks to the combination of high historical performance, solidity and low costs, S&P 500 ETFs are an excellent solution for those who want to invest in the stock markets with an efficient, long-term approach.
How to choose the best S&P 500 ETF?
Choosing the best S&P 500 ETF can seem complicated, but by evaluating a few key factors you can identify the product best suited to your investment needs.
One of the most important aspects is the TER (Total Expense Ratio), which is the annual management cost of the ETF, expressed as a percentage. Although it may seem like a minimal figure, a higher TER can erode returns in the long run. The most competitive S&P 500 ETFs offer a TER between 0.03% and 0.10%, so it is essential to compare costs before investing.
Another key factor is the size and liquidity of the ETF. An ETF with large assets under management and higher trading volumes tends to be more stable and has tighter spreads, meaning a smaller difference between the buying and selling price.
S&P 500 ETFs can track the index in two ways:
● Physical replication: the ETF directly purchases all (or a representative portion) of the 500 stocks in the index. It is the preferred choice for transparency and stability.
● Synthetic replication: The ETF uses derivative instruments (swaps) to replicate the performance of the index. It may be more efficient in terms of tax or cost, but introduces counterparty risk.
For long-term investors, physical replication is generally the best choice for safety and simplicity.
Finally, another element to consider is dividend management . S&P 500 ETFs are divided into two categories:
● Accumulating ETFs : they automatically reinvest dividends, promoting compound growth.
● Distributing ETFs : they pay dividends to investors periodically (quarterly, half-yearly or annually).
If your goal is long-term growth, accumulating ETFs are preferable because they maximize returns through automatic reinvestment of dividends. If you want a periodic income, distributing ETFs are the best choice.
By carefully evaluating these criteria, you can select the S&P 500 ETF that best suits your investment strategies.
Best S&P 500 ETFs in 2025
Investing in an S&P 500 ETF allows you to gain exposure to the 500 largest US companies with a single instrument, but choosing the best ETF can make a difference in terms of costs, performance and investment strategy. Here is a selection of the best S&P 500 ETFs of 2025, analyzing costs (TER), replication method, dividend management and assets under management (AUM).
iShares Core S&P 500 UCITS ETF (IE00B5BMR087)
The iShares ETF is one of the most popular and used by investors due to its solidity and liquidity. With a TER of 0.07% and full physical replication , this fund directly purchases the shares of the index, ensuring transparency and reducing counterparty risk.
With assets under management exceeding 50 billion euros , it is one of the largest ETFs on the market, guaranteeing reduced spreads and greater efficiency in purchase and sale operations.
Available in both versions:
Accumulating → for those who want to maximize long-term growth.
Distributing → for those who wish to receive periodic income from dividends.
Vanguard S&P 500 UCITS ETF (IE00B3XXRP09)
The Vanguard ETF is a great alternative with a TER of 0.07% , identical to that of iShares, but with some differences in management.
This ETF uses full physical replication , directly purchasing the index stocks. Vanguard is known for its low-cost approach and quality of replication, making it an excellent choice for long-term investors.
Assets under management : over 35 billion euros.
Available versions : dividend distribution only.
If you are looking for a low-cost ETF with high liquidity, the Vanguard fund is among the best on the market.
SPDR S&P 500 UCITS ETF (IE00B6YX5C33)
The SPDR ETF is one of the longest-running in Europe and stands out for its wide diffusion. It has a slightly higher TER (0.09%) , but is one of the most traded and highly liquid.
Like other high-quality ETFs, it uses full physical replication and is only available in a dividend- paying version.
Assets under management : approximately 30 billion euros.
Perfect for investors looking for a proven and reliable tool.
Invesco S&P 500 UCITS ETF (IE00B3YCGJ38)
This Invesco ETF uses synthetic replication , which means it replicates the index through derivative instruments ( swaps ). This strategy reduces tracking error, maintaining a more precise alignment with the performance of the index.
The use of swaps can be advantageous for tax reasons, but introduces counterparty risk , as performance depends on agreements with third-party financial institutions.
TER : 0.05% (one of the lowest on the market).
Assets under management : approximately 10 billion euros .
Available only in storage version.
If you are looking for the lowest cost and don't mind synthetic replication , this ETF is an interesting option.
Xtrackers S&P 500 UCITS ETF (LU0490618542)
The Xtrackers ETF is a low-cost alternative with a TER of 0.07% and uses full physical replication .
Assets under management : approximately 15 billion euros .
Available in both accumulation and distribution versions .
Excellent for those who want to diversify among ETF providers without giving up physical replication .
How to invest in S&P 500 ETFs?
S&P 500 ETFs are financial instruments that are easily accessible even for those who have no experience in the world of investments. To purchase them, simply open an account with an online broker and choose the ETF that best suits your needs. However, to invest effectively, it is important to consider not only where to buy ETFs , but also how to manage the investment over time through accumulation and portfolio rebalancing strategies.
To buy an S&P 500 ETF you need a reliable financial intermediary. Today there are several online platforms that allow you to invest easily and at low costs.
The choice of broker depends on factors such as trading commissions, the possibility of accessing savings plans, the ease of use of the platform and the range of ETFs available.
Conclusions
S&P 500 ETFs are one of the best solutions for investing in a simple and diversified way in global markets. They offer broad exposure to over 1,500 leading companies in the United States, ensuring stability and growth over the long term. Thanks to low management costs and the possibility of choosing between physical or synthetic replication, accumulation or distribution of dividends, investors can adapt the choice of fund to their financial needs.
Selecting the most suitable ETF depends on several factors, including TER, liquidity and replication strategy. iShares, Amundi and Xtrackers are among the most reliable providers, while online brokers allow you to invest in these instruments with competitive costs. Which one will you choose for your next investment strategy?
The information provided in this content is for informational purposes only and does not constitute financial, legal or tax advice, nor does it intend to constitute a solicitation for public savings under current legislation. It is recommended to consult a qualified professional before making any investment decisions.
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