How to invest in S&P 500 from India?

The S&P 500 index is the most widely followed of the major U.S. stock indexes as a gauge of the general stock market’s performance and a measure of how significant firms are performing.

What is S&P? How does it work?  

The S&P 500 (sometimes referred to as the Standard & Poor’s 500) is a trademark of the S&P Dow Jones Indices joint venture.

It is a stock market index that includes the 500 largest firms in the United States and is often regarded as the most significant predictor of how the stock market in the United States is performing overall.  

From a different perspective, the S&P 500 is a statistical measure of the quality of America’s 500 largest stocks as an index. The S&P 500 is a standard baseline against whom portfolio success is measured in this context.  

Market capitalization is used to weight the S&P 500 index. The value of a company decides how much of an impact it has on the index’s performance.  

One essential item to note is that, even though these are 500 huge enterprises, there is a vast variation in prices. Several of the index’s top companies have over $1 trillion in market capitalizations.

This is much more than 200 times the size of the S&P 500’s smallest businesses, which have a market capitalization of $6 billion to $7 billion.  

Depending on performance-weighted market information for the underlying firms, the value of the S&P 500 index swings during the trading day.  

How to invest in the S&P 500?

1. The direct way  

By opening a US brokerage account through technology platforms or a foreign brokerage with a direct presence in India, you can invest directly in the world’s leading technology businesses like Apple, Tesla, P&G, Visa, NVIDIA, Berkshire Hathaway, etc. listed on S&P 500.  

You must send funds to the United States to invest in US stocks. You can do this as an Indian resident under the RBI’s Liberalized Remittance Scheme, which allows you to send up to US $250,000 per person per year.

Stocks are intrinsically expensive because their prices are denominated in dollars. However, you can acquire fractional shares, so you can start investing in your favorite firms with as little as $1.  

2. The ETF way  

ETFs are another option for investing in the S&P 500 from India. One approach is to purchase an ETF through a brokerage platform. One example is index ETFs, such as the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 100 index.

Companies including Amazon, Apple, Microsoft, Meta (Facebook), Netflix, Google (Alphabet), and Tesla are among the ETFs’ top holdings.  

Another method to engage in the S&P 500 from India is to buy ETFs like the Mirae Asset S&P ETF, which invests in US indices.

You can trade in these ETFs without opening a new brokerage account in the United States. However, tracking errors in these ETFs may negatively influence your gains.  

3. The mutual fund way  

In this situation, you’ll most likely be investing in funds of funds or a domestic mutual fund that invests in a US mutual fund that invests in the S&P 500.

Since the investment would be made in Indian rupees, there is no investment restriction. This strategy, though, may prove to be more expensive. These funds’ expenditure ratios are often higher. Motilal Oswal S&P 500 Index Fund is one such Mutual Fund.  

As we’ve seen, there are numerous ways to invest in the S&P 500 and join the world’s largest stock market from India.