S&P 500 ETFs: 7 Ways to Play the Index

Trillions of dollars are benchmarked to the ubiquitous S&P 500. These S&P 500 ETFs let you play the index ... either directly, or with a twist.

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The universe of exchange-traded funds (ETFs) includes more than 7,000 products worldwide, ranging from sophisticated and tactical funds to rather vanilla index ETFs tied to tried-and-true benchmarks. And among the latter, few are more popular than S&P 500 ETFs.

The Standard & Poor's 500 index is one of the stock market's most widely followed benchmarks because it is comprehensive, diversified and fairly easy to understand. The S&P 500 tracks the shares of 500 large, predominantly U.S-domiciled companies that trade on the major American exchanges. That's it.

Of course, it's next to impossible for average investors to perfectly replicate the S&P 500's exposure by purchasing stock in each of the index's 500 firms. Enter ETFs – simple, cost-effective vehicles that allow investors to "buy the index" with the push of a button. Even Berkshire Hathaway (BRK.B (opens in new tab)) CEO Warren Buffett believes most investors should just buy and hold an S&P 500 fund. He bought two such funds for the Berkshire Hathaway equity portfolio in 2019, and he even brought the topic up at his company's annual shareholder meeting earlier this year, saying "I recommend the S&P 500 index fund, and have for a long, long time."

When a world-class stock picker tells even well-heeled investors in his own company to stop picking stocks and simply buy and hold the S&P, small investors should take notice and follow this advice.

If you're interested in doing so, here are a few S&P 500 ETFs to consider. While some of these funds provide direct exposure to the major market index, others provide interesting twists that make them mainstays of more active tactical investors and even traders.

Data is as of Aug. 8. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

Jeff Reeves
Contributing Writer, Kiplinger.com

Jeff Reeves has covered finance and capital markets since 2008, contributing to outlets including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today, US News & World Report and CNN Money.