What is the index?
The S&P 500 is a stock index that includes 500 large companies traded in the United States. An index tracking track tries to give similar exposure to the index, usually through different investment instruments.
The index is considered very central in the global capital market, but it still mainly represents the American stock market and not the whole world.
The benefits and risks
The main advantage is simplicity, dispersion among many companies and costs that may be relatively low on certain tracks. For long-term savers, exposure to a broad index can be a significant component.
However, there are risks: sharp declines in the stock market, concentration in certain industries, exposure to the dollar, and dependence on the American economy.
Who is it for?
Such a track can suit those who understand that they are choosing a relatively volatile stock exposure. It is less suitable for money that is needed soon or for those who are unable to absorb declines.
It is useful to compare tracks, to check whether there is a hedged currency exposure or not, and to understand the place of the index within the overall portfolio.