ETF on S&P 500 in Simple Terms — Part 2

ETF is an exchange-traded fund that is traded like a regular stock. An ETF on the S&P 500 holds shares of the 500 largest US companies.

How it works

By purchasing a single share of an ETF on the S&P 500, you become a co-owner of shares in Apple, Microsoft, Amazon, Google, Nvidia, and 496 other companies. The fund itself balances the portfolio.

Why it's popular

• Diversification. One security = 500 companies.
• Low fees. 0.03–0.10% per year.
• Historical returns. The S&P 500 averages 9–10% annually over the long term.
• Simplicity. No need to select stocks.
• Liquidity. Traded like a regular stock.

Popular ETFs on the S&P 500

VOO (Vanguard). Fee of 0.03%. Assets over $400 billion.

SPY (SPDR). The oldest (since 1993). Fee of 0.09%.

IVV (iShares). By BlackRock. Fee of 0.03%.

ETFs on other indexes

VTI. The entire US market — over 4000 companies.

QQQ. The 100 largest companies on NASDAQ.

VXUS. Markets outside the US.

VWCE. The entire world in one ETF — over 9000 companies from 40+ countries.

Risks

The ETF tracks the index. If the market falls, the ETF also falls. This is not guaranteed income.

• Market risk. The S&P 500 has fallen 30–50% during crises.
• Currency risk. The dollar may weaken against the somoni.
• Concentration. The top 10 companies currently make up about 30% of the index.

DCA Strategy

Buy ETFs for a fixed amount each month. During downturns, you buy more shares. Over the long term, it averages the cost. Example: $100 per month into VOO, about $20,000 in 10 years.

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Advertisement. LLC “Stock Broker,” licenses of the Ministry of Finance of RT No. 007/25, No. 008/25, No. 009/25, No. 010/25 from 06.25.2025. Financial instruments are associated with risk. Yield depends on the market value of assets. Not an individual investment recommendation. Material is for informational purposes only.