The S&P 500 - Why it remains a must for every portfolio

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For decades, the S&P 500 $VUSA (+0,32 %)

has been one of the cornerstones of many investor portfolios for decades. With stable returns, a broad mix of leading US companies and a simple investment structure, it is the epitome of a solid investment. But what makes the S&P 500 so special and why is it still such a safe choice? Let's take a closer look at the reasons why the S&P 500 has lost none of its appeal since its inception.

1. solid returns over decades

Since its introduction in 1957 by Standard & Poor's, the S&P 500 has achieved an impressive average return of around 10% per year, if dividends are included. Excluding dividends, growth is around 6-7 % per year. Of course, there are always setbacks and crisis years, but over the long term the index shows remarkable resilience. This consistency is particularly valuable for investors looking for long-term capital growth.

2. broad diversification with a slight focus

The S&P 500 comprises the 500 largest listed companies in the USA, from technology giants to banks and consumer goods manufacturers. This diversification spreads the risk and ensures that the success of the index is not dependent on the performance of a single sector. However, the index is currently dominated by a small number of tech companies - the ten largest companies, including Apple, Microsoft and Alphabet, account for around a quarter of the market capitalization. Should the technology sector weaken, this could have a noticeable impact on the index. Nevertheless, the S&P 500 remains broad enough to serve as a solid foundation for a portfolio thanks to its cross-sector focus.

3. rigorous selection and market leadership

The S&P 500 only includes companies that meet strict criteria in terms of size, liquidity and financial stability. Companies that make it into this index have often established themselves as market leaders in their sector and offer investors a certain degree of stability over the long term. The index is weighted by market capitalization, which means that the largest companies have the greatest influence on performance. Although this leads to a certain dependence on the top companies, it ensures that the S&P 500 is driven by the best performing companies in the country.

4. a reflection of the US economy - and beyond

The S&P 500 is often seen as an indicator of the US economy, as it tracks the country's largest companies. However, many of these companies operate worldwide, which is why the index increasingly reflects the global economy. Large parts of the turnover of these companies now come from international markets, which makes the S&P 500 an indirect participation in global economic growth. This makes the index particularly suitable for investors who want to participate in the success of the largest global players without being tied to individual international markets.

5. inflation protection and capital growth

Over the long term, the S&P 500 has generally been able to compensate for inflation and also provide real capital growth. In phases of moderate inflation, investors have achieved high real returns with the index. However, there were times, such as in the 1970s, when real returns were significantly reduced by high inflation rates. Nevertheless, the S&P 500 remains a reliable protection against the creeping devaluation of money - especially in comparison to many bonds.

6. cost efficiency through ETFs

A major advantage of the S&P 500 is that it can be easily and cheaply tracked via exchange-traded funds (ETFs). The cost of many S&P 500 ETFs is less than 0.1% per year, making them extremely cost-efficient - especially when compared to actively managed funds. Names such as the Vanguard S&P 500 ETF or the iShares Core S&P 500 ETF offer investors a cost-effective way to invest broadly in the US market and exploit the potential of the index without having to pay high fees.

7. high liquidity and ease of trading

The S&P 500 is one of the most traded indices worldwide. This ensures high liquidity and low trading costs, which makes it attractive for both private and institutional investors. The strength of a liquid index is particularly evident in times of crisis: investors can adjust their positions quickly and transaction costs remain low even with high trading volumes. The S&P 500 is therefore ideal for investors who value flexibility and accessibility.

8. high popularity with international investors

The S&P 500 attracts not only American but also numerous international investors. Many see it as giving them direct access to the largest and most successful companies in the USA - and thus also to the innovative strength of the US economy. Especially in times of uncertain markets outside the USA, the S&P 500 is an attractive alternative that enables international investors to benefit from the stability and growth of the US market.

Conclusion: A "no-brainer" for every portfolio

Thanks to its long-term stability, high liquidity and the ability to invest cost-effectively via ETFs, the S&P 500 remains one of the best investment opportunities for long-term investors. The historical return of around 10% per year including dividends and the solid inflation protection make it the ideal basis for asset accumulation. Even if the dominance of the technology sector means a slight concentration, the S&P 500 offers a good balance thanks to its broad sector diversification.

The S&P 500 therefore remains the first choice for investors who want to invest simply and safely in the major trends and market leaders. It makes it possible to participate in the power of the US economy and its globally active top companies - at low cost and with impressive long-term performance.