Published on: November 26, 2023
Author: Derar Hasn
|Table of Content
|How to invest in the S&P 500 from the UAE
|What is the S&P 500?
|Why is the S&P 500 a better gauge than the Dow Jones Industrial Average?
|Are there any other S&P Indices?
|Tips to invest in the S&P 500 from the UAE
|What is the S&P 500 ETF?
Investing in the S&P 500 is one of the most popular options if you want to get diversified exposure to the US stock market. By tapping into the S&P 500 from the United Arab Emirates, you can gain access to the performance of the US economy as a whole and potentially benefit from the growth of publicly traded companies in the US. Investing in the S&P 500 from the UAE is much easier than you might think. In this ultimate guide, you’ll find everything you need to know to start your trading journey with one of the world’s most renowned stock market indices.
First things first, let’s take a closer look at what the S&P 500 Index is.
The S&P 500 Index, also known as the Standard & Poor's 500 Index, is a market-capitalization-weighted index made up of 500 leading publicly traded companies in the United States, such as Amazon, Tesla, Microsoft, Apple, Nvidia and Alphabet. The S&P 500 includes companies traded on the New York Stock Exchange (NYSE), Nasdaq, and Chicago Board Options Exchange (CBOE). It was launched in 1957 by the credit rating agency Standard and Poor's. While it may not be an exact list of the top 500 US companies by market cap, the S&P 500 Index is widely regarded as one of the best indicators of the performance of prominent American equities and, consequently, the overall stock market.
The S&P 500 is widely recognized as one of the most frequently referenced American indexes because it represents the largest publicly traded companies in the United States. With a focus on the large-cap sector of the US market stock, the S&P 500 is a float-weighted index. It means company market capitalizations are adjusted based on the number of shares available for public trading.
Along with the S&P 500, the Dow Jones Industrial Average (DJIA) is another widely used benchmark in the US stock market. However, the S&P 500 is usually preferred by institutional investors because of its coverage and diversity. From the perspective of retail investors, the DJIA has historically been linked with major equities. The S&P 500 is perceived as a more comprehensive representation of US equity markets, covering a larger number of stocks across various sectors (500, compared to the Dow's 30). This broader inclusion of stocks is one of the factors that adds to the appeal of the S&P 500.
The S&P 500 is part of the S&P Global 1200 family of indices. Other indices include the S&P MidCap 400, covering mid-cap companies, and the S&P SmallCap 600, representing small-cap companies. Together, the S&P 500, S&P MidCap 400, and S&P SmallCap 600 make up the S&P Composite 1500, which covers 90% of all US capitalization.
Both "indexes" and "indices" are accepted plural forms of the word "index" when referring to more than one index. "Indices" is the original Latin plural commonly used in mathematical, scientific, and statistical contexts when comparing values to a standard.
On the other hand, "indexes" is often used in reference to written documents such as bibliographies or citation listings. When exchanges or financial news outlets refer to more than one index, they use the words” indexes” and “indices” interchangeably. But "indices" is more widely adopted in financial texts talking about stock-related index.
Listen, there’s good and bad news. Let’s start with the bad. Because the S&P 500 is an index, you can’t directly invest in it. But wait! Here’s the good news.
With the region’s leading brokers like amana, there are two ways to get access to the S&P 500 Index. You can trade it as a CFD or invest in one of the many exchange-traded funds that use it as a benchmark, tracking its composition and performance.
Contracts for difference (CFDs) are derivative financial instruments allowing traders to speculate on their price movements without owning the asset. So, investing in the S&P 500 CFD from the UAE involves trading based on the index’s price fluctuations.
How can UAE traders take a position on the S&P 500 CFD with amana, a Dubai-based leading MENA neo-broker with 125,000+ investors and traders worldwide?
Download for free the amana app from the App Store or Google Play.
Open a free account.
Deposit your funds.
Start trading the S&P 500 (SPX).
An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, aiming to mirror the performance of a particular index, commodity, sector, or asset class.
When it comes to investing in the S&P 500 from the UAE, forget about buying stocks of 500 companies separately, which can be inefficient and expensive. ETFs give a practical solution by offering a single investment vehicle that represents the performance of the entire index. By investing in S&P 500 ETFs designed to track the performance of the S&P 500 Index, you can effectively participate in the potential growth of the index. This unique approach offers an efficient and convenient way to diversify your investment over a wide range of holdings within the index.
Although there are no ETFs listed on the Dubai Financial Market (DFM), one of the UAE’s stock markets, that directly track the S&P 500, UAE investors can still gain exposure to the index by investing in international ETFs listed on other exchanges. We have compiled a list of some of the largest ETFs that track the S&P 500 to assist you in finding suitable options. Check out some of the available S&P 500 ETFs on the amana app below.
SPDR S&P 500 ETF Trust (SPY)
iShares Core S&P 500 ETF (IVV)
Vanguard 500 Index Fund (VOO)
Invesco S&P 500 Equal Weight ETF (RSP)
SPDR Portfolio S&P 500 Growth ETF (SPYG)
What is the cheapest way to invest in the S&P 500?
Make sure to go with a brokerage, such as amana, that has fees as low as possible to invest in S&P 500 ETFs or trade S&P 500 CFD. At amana, you can enjoy zero commission and no hidden fees. What’s more, amana doesn’t charge you any fees on deposits and allows you to easily deposit funds using one of the most popular options available:
UAE bank transfer.
Wire transfer (AED or USD).
Can I invest in the S&P 500 from abroad?
Yes, it’s possible with the amana app. Whether you live in the UAE or almost every other country worldwide, you can explore S&P 500 ETFs or S&P 500 CFD on the app. To start, all you have to do is download the amana app. That’s it! So, if you want to get exposure to the US market through the S&P 500 Index in a convenient and fast way and potentially benefit from its long-term growth, amana is your option.
Investing in the S&P 500 from the UAE might be a rewarding endeavor for individuals looking to gain exposure to the US stock market. The S&P 500 is a renowned index that represents the performance of 500 leading publicly traded companies in the US and serves as a reliable benchmark for American equities.
By utilizing options such as trading S&P 500 CFDs or investing in S&P 500 ETFs, UAE traders and investors can easily participate in the index's potential growth and enjoy the benefits of diversification. With region’s brokers like amana, people from almost anywhere in the world can tap into the S&P 500 Index. By following the tips, understanding the differences between S&P 500 CFDs and S&P 500 ETFs, and conducting thorough research, individuals can embark on their trading or investing journey.