Investing in S&P 500 Index Fund

S&P 500 Index.

The S&P 500 or Standard & Poor's 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The index is widely regarded as the best gauge of large-cap U.S. equities.

Other common U.S. stock market benchmarks include the Dow Jones Industrial Average or Dow 30 and the Russell 2000 Index, which represents the small-cap index. 

S&P 500 index constituents

How to invest in S&P 500 Index Fund?

Motilal Oswal recently launched S&P 500 Index Fund, which has given Indian investors a gateway to invest in world’s one of the most popular index.

Why S&P 500 Index Fund?

Investors in India have so far been investing Nifty Index Funds and S&P 500 index fund offers much needed global diversification. 

  • Pure large caps exposure
  • Global Exposure - In 2018, more than 40% of the sales of S&P 500 constituents were reported from foreign countries.
  • Dollar hedge for Indian investors.
  • Very low correlation with Indian equity market.

Lower correlation offers opportunity for diversification.
Combining assets that are less/not correlated helps reduce portfolio volatility, thereby improving risk adjusted returns.

S&P 500 Index Fund

Performance of S&P 500 Index:

S&P 500 Index Fund
source MOSL

As you can see from the above returns table, S&P 500 Index has give better risk adjusted returns, over longer periods.

Details of Motilal Oswal S&P 500 Index Fund.
  • Benchmark – S&P 500 TR Index
  • Total Expense Ratio – Direct – 0.49%.
  • Exit Load – 1% for 3 months from the date of investment.
  • Continuous Offer – Lump sum and SIP.
  • Minimum Application Amount : INR 500/- and in multiples of INR 1/- thereafter.

Historically, the S&P 500 Index noted very low correlation of 15% with Nifty 50 and offers potential diversification. 
Indian investors who have invested in Nifty 50 index fund as core portfolio can consider adding S&P 500 Index Fund as a diversification. (Example: Like 80% in Nifty 50 and 20% in S&P 500). They can invest via Systematic Investment Plan (SIP) for long-term based on their risk-profile and goals.