It includes the 200 largest Australian companies based on market capitalisation.

The index is also market-cap weighted, meaning bigger companies have more influence on the index's movement

In simple terms: it shows how the top slice of the Australian stock market is performing overall.

Here in Australia, it has a strong weighting towards big banks and mining companies, which make up most of the largest companies. 

Investors often monitor the performance of this index to see how their portfolio compares. 

Many Aussie investors also compare the ASX 200 Index to the benchmark index in the US – the S&P 500 Index (SP: .INX). 

The S&P 500 tracks the performance of 500 of the largest publicly traded companies in the United States.

Unlike the ASX 200, it is weighted heavily towards technology giants like Apple and consumer discretionary stocks like Amazon. 

How do you invest in these markets?

The simplest way for investors to gain exposure to these markets is through ASX ETFs.

If you are looking to track the performance of the ASX 200, two options to consider are: 

• iShares Core S&P/ASX 200 ETF (ASX: IOZ)
• BetaShares Australia 200 ETF (ASX: A200)

Meanwhile, for exposure to the S&P 500, investors may consider: 

• iShares S&P 500 ETF (ASX: IVV)
• SPDR S&P 500 ETF Trust (ASX: SPY)

There are also several alternatives to these ASX ETFs that may provide a slightly different focus for investors to consider. 

For example, investors looking for slightly more diversification in the Australian market could consider the Global X Australia 300 ETF (ASX: A300). 

As the name suggests, it includes the 300 largest companies rather than the traditional 200. 

Focusing on the US, another popular investment is in the BetaShares NASDAQ 100 ETF (ASX: NDQ). 

This index is often referred to as representing the new economy – including 100 of the largest non-financial companies listed on the Nasdaq in the US. 

My colleague Grace Alvino explains why investors may target this fund instead of the traditional S&P 500 in her article from this morning. 

It's also important to note that investors do not have to decide between one or the other.

Many investors choose to include both US and Australian focused funds in their portfolio.

Which is performing better this year?

So far in 2026, the ASX 200 has increased by approximately 2.7%. 

Considering a fall of 9% during March, it has shown resilience to geopolitical volatility this year. 

Meanwhile in the US, the S&P 500 has increased 1.59%. 

Finally, the NASDAQ-100 Index (NASDAQ: NDX) is currently tracking somewhere in between the two, rising 2.5% year to date. 

The post Has the ASX 200 or S&P 500 been a better investment this year? appeared first on The Motley Fool Australia.

It is made up of the 200 largest Australian companies based on market cap.

It is heavily weighted towards Australia's largest companies like Commonwealth Bank of Australia (ASX: CBA) and mining giants like BHP Group (ASX: BHP). 

Because these companies are significantly larger than most of the others, the ASX 200 index is largely influenced by how these blue-chip companies perform. 

For example, CBA is twice as big as the next largest bank and almost 5x larger than the 11th largest company listed on the ASX. 

How did the ASX 200 perform this year

The ASX 200 index started the year at 8,201 points. 

It dropped significantly from February to early April, declining more than 14% in that span. 

This was largely due to a strong sell-off in early April as investors reacted to Tariff news from the US. 

After this initial panic, the ASX 200 steadily recovered. 

Prior to Christmas eve, it closed trading at 8,795.70 points, which is an overall rise of 7.25% for the year. 

Overall this sits just below, but close to an average year for the index. 

Motley Fool research shows the ASX 200 has compounded at roughly 9% per annum over the last 10 years, dividends included.

How does this compare to the US?

Two of the key indexes investors pay close attention to in the US are the S&P 500 Index (SP: .INX) and the NASDAQ-100 Index (NASDAQ: NDX). 

The first, the S&P 500 index, is widely regarded as the best single gauge of large-cap U.S. equities. 

The index includes 500 leading companies and covers approximately 80% of available market capitalisation.

Meanwhile, the Nasdaq 100 Index includes 100 of the world's largest non-financial companies listed on the broader Nasdaq sharemarket. 

As a collection of dynamic companies at the forefront of innovation, the Nasdaq 100 Index has come to represent the 'new economy'. 

This year, the S&P 500 Index has risen 17.21%. 

Meanwhile, the NASDAQ-100 Index has risen 21.39%. 

Since 1985 (until December 2024), the NASDAQ-100 index has provided an average annual return of 14.25%, compared to 11.57% for the S&P 500. 

How do investors get exposure?

For investors looking to track these Australian and global indexes, there are many ASX ETFs to choose from. 

For exposure to the ASX 200, some options include: 

• BetaShares Australia 200 ETF (ASX: A200)
• iShares Core S&P/ASX 200 ETF (ASX: IOZ)
• SPDR S&P/asx 200 Fund (ASX: STW)

To track the S&P 500: 

• iShares S&P 500 ETF (ASX: IVV)
• SPDR S&P 500 ETF Trust (ASX: SPY)

To track the NASDAQ 100, investors can consider: 

• BetaShares NASDAQ 100 ETF (ASX: NDQ)
• Betashares Nasdaq 100 ETF – Currency Hedged (ASX: HNDQ)

The post Did the ASX 200, NASDAQ 100, or S&P 500 perform better this year? appeared first on The Motley Fool Australia.

Amid diminishing hopes for another US Fed interest rate cut in 2025, and mounting concerns over a potential AI bubble, the S&P 500 closed down 1.6% on Thursday, ending the day at 6,539 points.

This sees the benchmark US stock market index down 5.1% since notching its record closing high of 6,891 points on 28 October.

Taking a step back, however, the US index has still materially outperformed the S&P/ASX 200 Index (ASX: XJO).

Year to date, the ASX 200 is up 2.9% while the S&P 500 has gained 11.2% over this same period.

As for the year ahead, the team at Morgan Stanley forecasts a big uplift for the US markets.

We'll look at one ASX ETF (exchange-traded fund) that stands to benefit from that bullish forecast below.

But first…

Why Morgan Stanley expects the S&P 500 to surge in 2026

"We believe a new bull market began in April with the end of a rolling recession and bear market," Morgan Stanley chief US equity strategist Mike Wilson said on Wednesday. "Remember the S&P 500 was down 20% and the average S&P stock was down more than 30% into April."

According to Wilson:

This narrative remains underappreciated, and we think there is significant upside in earnings over the next year as the recovery broadens and operating leverage returns with better volumes and pricing in many parts of the economy.

Our forecasts reflect this upside to earnings which is another reason why many stocks are not as expensive as they appear despite our acknowledgement that some areas of the market may appear somewhat frothy.

And Morgan Stanley expects the US index, and by extension, the ASX ETF we'll examine below, to come roaring back.

"For the S&P 500, our 12-month target is now 7,800, which assumes 17% earnings growth next year and a very modest contraction in valuation from today's levels," Wilson said.

That target represents a 19.3% upside from current levels.

As for which stocks could lead the charge, Wilson added:

Our favourite sectors include Financials, Industrials, and Healthcare. We are also upgrading Consumer Discretionary to overweight and prefer Goods over Services for the first time since 2021.

How to mirror those outsized potential gains with one ASX ETF

If you're looking to mimic the potential 19% plus gains Morgan Stanley expects from the S&P 500, you might want to have a look at the SPDR S&P 500 ETF Trust (ASX: SPY).

The ASX ETF provides you with exposure to 500 of the largest US-listed companies, with the goal of tracking the performance of the benchmark US index.

The ASX ETF's largest four holdings are Nvidia Corp (NASDAQ: NVDA), Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), and Amazon.com Inc (NASDAQ: AMZN).

The post Why Morgan Stanley's S&P 500 target forecasts a 19% gain for this top ASX ETF appeared first on The Motley Fool Australia.

Ongoing strength in the US market is lifting not just ASX ETFs holding US stocks but also those holding diversified international shares.

This is because US shares dominate diversified global ETFs as America is home to so many of the world's largest and most profitable businesses.

For example, the VGS ETF is invested in about 1,300 of the world's largest companies listed in major developed countries.

About 76% of those companies are in the US.

Another example is the iShares Global 100 AUD ETF (ASX: IOO), which seeks to track the performance of the 100 biggest global equities.

Just under 81% of IOO ETF holdings are US shares.

Last night, the benchmark index for the US market, the S&P 500 Index (SP: .INX), smashed another record high at 6,698.88 points.

The S&P 500 is up 13.8% in the year to date compared to an 8.2% bump for the S&P/ASX 200 Index (ASX: XJO).

Last night, the Dow Jones Industrial Average Index (DJX: .DJI) also hit a record 46,447.13 points, up 9% this year.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) followed suit with its own record of 22,801.90 points, up 26.8% in 2025.

On the ASX today, the ASX 200 is up 0.74% and the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.69%.

Let's look at some of the ASX ETFs holding international shares that are setting new 52-week highs, if not all-time records, today.

International ASX ETFs smash records on Tuesday

The post Own IOO, IVV, or VGS ETFs? They're smashing records today! appeared first on The Motley Fool Australia.

This follows a big session on Wall Street, with the benchmark S&P 500 Index (SP: .INX) reaching another record close of 6,656.8 points.

Today's strong market appears to be having an outsized impact on ASX exchange-traded funds (ETFs).

At the time of writing, an extraordinary number of ETFs have hit new 52-week highs, or multi-year highs, on the back of today's exuberance.

In fact, at the time of writing, 68 ASX exchange-traded funds have hit new high prices.

Macroeconomic elements may be playing a role in the market surge.

Yesterday, we had the news that the US Fed Reserve has cut interest rates and Australia's jobless rate held steady last month.

ETFs are a favoured way for Aussie investors to access international markets without the hassle of trading on an overseas exchange.

The amazing three-year run for US equities has inspired Aussie investors to think beyond the ASX 200 and the local banks and miners.

The popularity of ETFs is a global trend playing out strongly in Australia.

Betashares data shows Australian investors ploughed a record $5.28 billion into ASX ETFs in July alone.

68 ASX shares setting new records today

Here is a sample of the 68 ASX exchange-traded funds smashing new highs today.

The post 68 ASX ETFs smash multi-year highs amid strong trading on Friday appeared first on The Motley Fool Australia.

And by 'it', I mean surged to new all-time high territory.

The benchmark US stock market index closed up 0.83% overnight to end Thursday at 6,502 points.

This sees the S&P 500 up 17.8% over 12 months. And the index has rocketed 30.5% since the 8 April lows as investors bought the dip brought on by fears over United States President Donald Trump's tariff campaign.

For some comparison, the S&P/ASX 200 Index (ASX: XJO) is up 11.1% in 12 months and up 20.8% from its own 7 April lows.

The outperformance of US stocks over their Aussie counterparts is a longer-term trend than that.

Ove the past five years, for example, the benchmark US index is up 89.7% compared to the 49.8% gain posted by the ASX 200.

Which brings us to the ASX stock quietly joining the rally.

ASX stock joins the ride to fresh highs

There are a growing number of exchange-traded funds (ETFs) available on the ASX that are intended to track the performance of various US markets.

For the S&P 500, you might want to look into the SPDR S&P 500 ETF Trust (ASX: SPY).

The ASX stock does not provide currency hedging. So your gains or losses will both closely mirror the moves of the US index as well as any movements in the US to Aussie dollar exchange rate.

SPY's largest holdings include Nvidia Corporation (NASDAQ: NVDA), Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), and Amazon.com, Inc. (NASDAQ: AMZN).

Shares in the ASX ETF are up 20.5% over 12 months and up 109.8% in five years.

What's driving the S&P 500 to new records?

The S&P 500's overnight leap to new all-time highs looks to have been spurred by weak initial August jobs data out of the US.

With the labour market in the world's top economy apparently slowing, investors have upped their bets on another interest rate cut from the US Federal Reserve when the central bank meets again later this month.

And lower rates, as you know, tend to be a boon for most stocks.

Commenting on the latest look into the US labour market, Will Compernolle at FHN Financial said (quoted by Bloomberg), "Even the most easing-sceptical officials should concede increasing risks of labour-market weakness."

Jamie Cox at Harris Financial Group added, "The Federal Reserve's free pass on the labour market has ended. You can expect the Fed to tilt its balance of risks to cut rates in September."

Chris Larkin at E*Trade from Morgan Stanley cautioned that the S&P 500 rally could stumble if US unemployment trends too high.

Larkin said:

In the short term, markets may embrace that data because it should increase the odds of Fed rate cuts. But if the numbers deteriorate too much, it could raise concerns about the health of the economy.

A detailed US payrolls report will be released overnight.

Stay tuned.

The post S&P 500 smashes new record highs and the ASX stock joining the rally appeared first on The Motley Fool Australia.

The benchmark US stock market index closed yesterday at 6,299.19 points.

While that's down 1.4% from the all-time closing high of 6,389.77 points, notched on 28 July, the S&P 500 has rocketed 26.4% since the 8 April close.

For some comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 20.1% since its own recent lows on 7 April.

That outperformance becomes more marked if we take a step back.

Over the past five years, the ASX 200 is up 46.9% while the S&P 500 has soared 88.0%.

Clearly then, it's paid to have at least some of your investment eggs nestled in the US stock market.

Of course, these gains have all come on gone.

The million-dollar question now is, can the US stock market keep marching higher into 2026?

For some greater insight into that question, we defer to Nicole Inui, head of equity strategy for the Americas at HSBC (courtesy of The Australian Financial Review).

What now for the S&P 500?

Pointing to what's motivating investors in US stocks, Inui said it's the "excitement around AI and policy shifts".

This has seen tech stocks broadly outperforming other stocks on the S&P 500.

According to Inui:

Both groups of stocks have rallied since 'liberation day', but tech has outperformed and rightly so. The tech rally has been driven by fundamentals. Earnings growth is tracking near 20% for 2025 with positive momentum as earnings revision ratios move higher.

On the other hand, for the 'rest' of the market, earnings growth and momentum is slowing. Financials are the notable exception.

And Inui expects the AI trend to continue to drive investor interest.

"We have more confidence in the sustainability of the AI trade than further easing on policy uncertainty. Earnings releases from key stakeholders continue to tout the benefits of AI and its positive impact on results," she said.

As for where the S&P 500 is heading next, HSBC's bear case sees the index falling 9.5% to 5,700 points if Trump's tariffs "drive corporate profits lower and inflation higher".

The broker's base case sees the benchmark US index at 6,400 points, or about 1.6% above current levels. That's based on 2025 earnings growth of 9%, with the impact of US tariffs on corporate profits "offset by continued strength in tech".

Inui said HSBC's bull case "assumes AI adoption accelerates while suppliers bear much of the tariff costs". In this case, the S&P 500 could gain another 11.1% from current levels to reach 7,000 points.

Can I invest in the US stock market on the ASX?

There are a number of ASX-listed exchange-traded funds (ETFs) that are intended to track the performance of various US markets.

For the S&P 500, you might want to look into the SPDR S&P 500 ETF Trust (ASX: SPY).

The ASX ETF's largest holdings include Nvidia Corporation (NASDAQ: NVDA), Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), and Amazon.com, Inc. (NASDAQ: AMZN), to name a few.

The post Up 26% since April, can the S&P 500 keep charging higher into 2026? appeared first on The Motley Fool Australia.

And by 'it', I mean break into new all-time high territory.

After slipping into the red for much of the day, the benchmark US index staged an afternoon recovery to close up a slender 0.02% on Monday at 6,389.77 points.

Slender or not, that marks yet another new record for the S&P 500. The index is now up 17.0% since this time last year and has gained 95.3% over five years.

By comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 8.6% in a year and is up 46.3% in five years.

But with the US stock market already having surged to a series of new records, are we in bubble territory, or is there still time to be greedy?

For some greater insight into that million-dollar question, we defer to the strategists at Morgan Stanley (courtesy of The Australian Financial Review).

Can the S&P 500 keep charging higher into 2026?

Commenting on the S&P 500's record-setting year, Morgan Stanley equity strategist Michael Wilson said:

The capitulatory price action and earnings-per-share estimate cuts we saw in April of this year around Liberation Day represented the end of a rolling earnings recession that began in 2022.

Now, we appear to be transitioning to a rolling recovery backdrop aided by positive operating leverage, AI adoption, [US] dollar weakness, cash tax savings from the [recently passed Republican tax cut and spending bill], easy growth comparisons, pent-up demand for many sectors, and a high probability of Fed cuts by the first quarter of 2026.

Wilson added that the market has yet to fully appreciate these developments. He said:

The historically sharp inflection we're seeing in earnings revisions breadth confirms this process is underway, an underappreciated development, in our view. This rebound in revisions also suggests that returns for the average stock are likely to be quite strong over the next 12 months based on our back-test.

Noting that Morgan Stanley now leans more towards its 12-month bull case, Wilson sounded a note of caution, reminding investors that even a broadly rising market "is not without risks".

"Thus, we do expect some consolidation tactically but would reiterate that we expect pullbacks to be shallow, and we're buyers of dips," he said (quoted by the AFR).

Morgan Stanley's bull case sees the S&P 500 hitting 7,200 points by mid-2026. That's up another 12.7% from current levels.

How to invest on the ASX

If you're looking to mimic the performance of the S&P 500 without having to buy 500 US stocks, you may wish to check out the SPDR S&P 500 ETF Trust (ASX: SPY).

The ASX-listed exchange-traded fund (ETF) provides investors with exposure to 500 of the largest US-listed companies and aims to track the benchmark US index.

Over the past 12 months, the ETF has gained 17.1%.

And you've likely heard of its largest four holdings. Namely Nvidia Corporation (NASDAQ: NVDA), Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), and Amazon.com, Inc. (NASDAQ: AMZN).

The post Is it too late to invest in the record setting S&P 500 stock gains? appeared first on The Motley Fool Australia.

If you spend any time around Wall Street, from just reading market news to actually working in finance, you know the names Warren Buffett and Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), which is the company he runs.

Despite the stock's incredible track record, however, there are reasons it may not be the smartest investment you can make. But there are also reasons it could be a great choice. Here's what you need to know.

Why you should avoid Berkshire Hathaway

The first big reason that an investor might not want to buy Berkshire Hathaway is that it doesn't pay a dividend. And it doesn't appear likely that it will anytime soon. So, if your goal is to generate income from your portfolio to pay for living expenses in retirement, you will not want to buy Berkshire Hathaway stock.

The second reason to avoid Berkshire Hathaway is its complexity. The large insurance operations within the company's portfolio of businesses typically lead it to fall into the finance sector. But the truth is, it is a widely diversified conglomerate. It owns over 180 companies outright and has a portfolio of publicly traded stocks, too. It has exposure to industries as varied as retail, railroads, and manufacturing and a whole lot more in between. If you like to keep your investments simple, this will not be the best option for you.

In that vein, Berkshire Hathaway is kind of like a mutual fund, given that you are, effectively, allowing Warren Buffett and his team to invest on your behalf. To be fair, the company's stock has vastly outperformed the S&P 500 index over time. So, trusting Buffett has worked out very well for investors. But if you like to directly handle all your investment decisions, owning Berkshire Hathaway probably won't be a great call.

BRK.A data by YCharts.

Letting the Oracle of Omaha do it for you

That said, as the chart above highlights, owning Berkshire Hathaway stock has been a big win for investors over time. So, trusting Warren Buffett and his long-term investment approach has worked out well. From a simplistic level, all he's doing is buying well-run companies when they appear attractively valued and then holding for the long term to benefit from the companies' growth over time. Only, if it were really that simple, every investor would have an incredible performance record. And that's just not the case.

Investors who are willing to let an expert handle their hard-earned savings could do much worse than buying Berkshire Hathaway. That said, while the S&P 500 index has been heading higher lately, Berkshire Hathaway stock has been falling. At least part of the reason is that Buffett has announced his intention to step down as CEO. Long-term employee Greg Abel is replacing him at the end of 2025.

This change must be carefully thought through because a new CEO can lead to significant shifts in the way a business is operated. But that's unlikely to happen at Berkshire Hathaway. First off, Buffett is stepping down as CEO, but he will remain chairman of the board, which means he will remain Greg Abel's boss. It is unlikely that Buffett will allow Abel to fail miserably without stepping in to help.

And then there's the not-so-subtle fact that Abel was, effectively, trained by Buffett. Just like Buffett was trained by famed value investor Benjamin Graham. Charlie Munger, Buffett's former partner, provided some educational input, too. Abel has a very impressive educational background as an investor. While he will most certainly do things differently, it seems likely that he won't abandon Buffett's basic approach to chart an entirely new course.

Berkshire is a smart pick for the right investor

Berkshire Hathaway won't be the smartest investment choice for all investors, despite its strong historical stock performance. But if you don't mind entrusting someone else to handle your savings and believe that Abel will carry on the Buffett approach, it could still be a very attractive investment choice for your portfolio.

The one remaining caveat is that Berkshire Hathaway is so large today that future growth may be less impressive than past growth. But with over $345 billion in cash on the balance sheet, a bear market could present a huge investment opportunity that gives Abel the option to boost growth beyond what seems probable with the market trading near all-time highs today.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is Berkshire Hathaway the smartest investment you can make today? appeared first on The Motley Fool Australia.

Except for the SPDR S&P 500 ETF Trust (ASX: SPY), the ex-dividend date for the distributions listed below is today.

The payment date is 11 July.

Here are the details.

How much will SPDR ASX ETF investors get?

The SPDR S&P/ASX 200 ETF (ASX: STW) will pay 66.6712 cents in cash per unit. The ETF will also pay 13.5988 cents worth of franking credits and 0.2108 cents worth of foreign tax credits.

The SPDR S&P/ASX iBoxx Australian Government Bond ETF (ASX: GOVT) will pay 18.0410 cents in cash per unit.

The SPDR S&P/ASX 200 ESG ETF (ASX: E200) will pay 107.1402 cents in cash per unit, plus 5.0135 cents worth of franking credits and 0.0323 cents worth of foreign tax credits.

The SPDR S&P/ASX 50 ETF (ASX: SFY) will pay 64.0319 cents in cash per unit plus 13.2627 cents worth of franking credits.

The SPDR MSCI Australia Select High Dividend Yield ETF (ASX: SYI) will pay 264.7328 cents in cash per unit. The ETF will also pay 7.8319 cents worth of franking credits and 0.0002 cents worth of foreign tax credits.

The SPDR S&P/ASX Small Ordinaries ETF (ASX: SSO) will pay 21.5897 cents in cash per unit, plus 6.9222 cents worth of franking credits and 0.1865 cents worth of foreign tax credits.

The SPDR S&P/ASX 200 Resources ETF (ASX: OZR) will pay 20.6316 cents in cash per unit, plus 8.0525 cents worth of franking credits and 0.03770 cents worth of foreign tax credits.

But wait, there's more!

The SPDR S&P/ASX 200 Listed Property ETF (ASX: SLF) will pay 31.5595 cents in cash per unit. The ETF will also pay 0.0144 cents worth of franking credits and 0.0475 cents worth of foreign tax credits.

The SPDR MSCI World Quality Mix ETF (ASX: QMIX) will pay 109.9871 cents in cash per unit, plus 0.5967 cents worth of franking credits and 6.4629 cents worth of foreign tax credits.

The SPDR S&P Global Dividend ETF (AUS) (ASX: WDIV) will pay 125.7777 cents in cash per unit, plus 0.0365 cents worth of franking credits and 9.1763 cents worth of foreign tax credits.

The SPDR S&P World ex Australia Carbon Aware ETF (ASX: WXOZ) will pay 345.1500 cents in cash per unit. The ETF will also pay 11.4313 cents worth of foreign tax credits.

The SPDR S&P/ASX 200 Financials Ex-A-REIT Fund ETF (ASX: OZF) will pay 70.5192 cents in cash per unit plus 11.4581 cents worth of franking credits.

The SPDR S&P 500 ETF Trust (ASX: SPY) will pay US 1.761117 cents in cash per unit. The ex-dividend date was 20 June. The expected pay date for ASX investors is 14 August. State Street will announce the foreign exchange rate for the conversion into Australian currency in due course.

The post Own SPDR ASX ETFs? Here is your next dividend and when you'll receive it appeared first on The Motley Fool Australia.

At the time of writing on Monday, the index is at 6,090 points, another record high for the US equity benchmark.

For many investors, the prospect of buying into any asset or asset class, in this case, US stocks, can be daunting. It may even go against logic at face value.

But historical data suggests otherwise. That is, strong gains don't necessarily lead to weaker returns.

Let's put some numbers to this and see what the experts say.

History says S&P 500 returns remain strong

In a post to LinkedIn, Ophir Asset Management cites Goldman Sachs research noting the relationship between one-year historical returns and forward returns for the S&P 500.

Investors can be pleased with the findings.

Years with gains exceeding 20% (just like in 2024) typically lead to above-average returns the following year.

The median return after such a bombastic year has historically been 13%.

For reference, according to S&P Global, the long-term market return of the S&P 500 Index has been roughly 10% for the past 100 years.

This debunks the idea that a great year inevitably leads to a slump. As Ophir Asset Management aptly noted:

Don't get worried out of the market just because it's been roaring in the past year. Good returns are still typically ahead.

The old adage "time in the market beats timing the market" remains as true as ever!

And the data stacks in our favour when looking at periods following all-time highs as well.

In a separate LinkedIn post, Chief Investment Officer of Syzz Group, Charles-Henry Monchau, emphasised that historically, investing when the market is at record highs "has been a better strategy than buying on any other day".

Monchau shows that, from 1988 to 2023, buying at the market tops produced outsized gains. Cumulative returns were 48% over three years when doing so, up to 8 percentage points higher than when buying on "any random day".

For Aussie investors looking to capitalise on U.S. market performance, the SPDR S&P 500 ETF Trust (ASX: SPY) offers a straightforward way to gain exposure.

It is an exchange-traded fund (ETF) that directly tracks the S&P 500 Index.

What are the projections?

Investment bank UBS is also bullish on the S&P 500's prospects for the next two years. It forecasts the index to reach 6,600 by the end of 2025.

This will be driven by factors such as falling interest rates, a strong US economy and productivity gains from technology.

We think the US equity market looks Attractive and expect the S&P 500 to hit 6,600 by the end of 2025, around 10% higher than today's levels.

The US economic backdrop is supportive, the market is less at risk from tariffs than other international markets, and structural trends around AI and power and resources bolster the outlook.

[Artificial intelligence] AI-related companies that span semiconductors, cloud service providers, devices, and data centers account for over one-third of the S&P 500 by market cap. We expect around 11% S&P 500 earnings per share growth in 2024 and 8% in 2025.

UBS also highlighted potential policy tailwinds, including possible tax cuts and deregulation under a Trump administration, as further catalysts for market growth.

Foolish takeaway

The S&P 500's stunning performance in 2024 might make you pause, but history tells us that strong years often pave the way for more gains.

For investors, staying the course and maintaining a long-term perspective could be the winning strategy. As always, diversification remains key, and ETFs like SPY provide a simple, cost-effective way to ride the wave of US market growth.

The post History says the S&P 500 will go against intuition in 2025 after a record-breaking year appeared first on The Motley Fool Australia.

As a reminder, the S&P 500 Index is the major index tracking the performance of the US stock market. It represents the top 500 companies by market capitalisation and other factors like earnings growth and trading liquidity.

Goldman Sachs' chief US equity strategist, David Kostin, has raised his target for the S&P 500 after a strong earnings season.

The strategist lifted the target to 6,500 by the end of 2025, signalling a potential 10% gain from current levels.

For reference, it currently sits at 5,916 points. Such growth bodes well for the ETF tracking the index, the SPDR S&P 500 ETF Trust (ASX: SPY).

This optimism is underpinned by expectations of continued US economic expansion, steady earnings growth, and stable bond yields.

Let's take a closer look.

Why are strategists bullish on the S&P 500 Index?

The S&P 500 Index has delivered a solid performance, up 24% year to date. This has been driven by the artificial intelligence (AI) boom and economic stability of the US.

Big names like Nvidia Corporation (NASDAQ: NVDA) have fuelled much of this rally, with the "Magnificent Seven" tech stocks significantly outperforming the broader index in 2023 and 2024.

However, Goldman predicts a shift in 2025.

The "Mag–7" as they are often dubbed — Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), Meta Platforms Inc (NASDAQ: META), Tesla Inc (NASDAQ: TSLA), and Nvidia — are expected to narrow their outperformance.

While these stocks will likely continue to grow, Kostin sees gains broadening across the remaining 493 companies in the S&P 500 Index.

In our baseline macro outlook, the economy and earnings continue to grow and bond yields remain around current levels,

The narrowing differential in earnings growth rates should correspond with a narrowing in relative equity returns,

Although the 'micro' earnings growth story supports continued 'Magnificent 7' outperformance, more 'macro' factors such as economic growth and trade policy lean in favor of the S&P 493 [the other constituents of the index].

Will AI remain a growth driver?

This is a question on many investors' minds as we head towards the end of the year. In Goldman's eyes, AI remains central to growth forecasts, but the focus may shift.

The firm expects gains to move from AI infrastructure companies like Nvidia. It manufactures chips. But businesses leveraging AI to drive revenue growth are also set to benefit.

This includes giants such as Meta and Apple, which are rapidly integrating AI into their operations and have huge R&D budgets to do so.

Goldman also highlights macroeconomic factors, such as trade policy and fiscal measures, that could influence the S&P 500 Index's trajectory.

For example, "friendlier" fiscal policies could further lift stocks, while risks like tariffs or rising bond yields could dampen gains.

Safe to say the outlook is fairly balanced when considering all of the risks.

Foolish takeaway

Although the path to 6,500 for the S&P 500 Index isn't guaranteed, Goldman Sachs believes the case for growth is compelling.

A broadening rally, supported by AI-driven innovation and economic resilience, could present opportunities for Australian investors looking to diversify into US equities.

The post Could the S&P 500 Index hit 6,500 by the end of 2025? appeared first on The Motley Fool Australia.

The S&P 500 closed up 1.2% in the US market yesterday, finishing the day for a new closing high of 5,308.2 points.

The benchmark US index has been on a tear this year, with the new closing high marking the 23rd new record close in 2024.

In late morning trade on Thursday here in Australia, the ASX 200 is up 1.34% at 7,857.6 points. That puts the ASX 200 within a whisker of its own record closing high of 7,896.9 points, set on 28 March.

As for the big US tech stocks, the Nasdaq Composite Index (INDEXNASDAQ: .IXIC) closed up 1.4% yesterday.

What's sending the S&P 500 and the ASX 200 soaring?

The biggest tailwinds helping lift the S&P 500 overnight and the ASX 200 today look to be more good news on the inflation front out of the United States.

The US consumer price index (CPI) increased 0.3% in April, down from 0.4% in March. That saw the annual inflation rate retreat to 3.4%, down from 3.5% a month earlier.

Core CPI, which excludes volatile items like food and energy prices, was also up 0.3% for an annual rate of 3.6%. That's the lowest core inflation level recorded by the world's top economy in three years.

As you'd expect, this is fuelling renewed hopes of earlier interest rate cuts from the US Federal Reserve, which should prove a boon for equities.

What are the experts saying?

Commenting on the US inflation data that sent the S&P 500 to new all-time highs and is seeing the ASX 200 rocket today, National Australia Bank Ltd (ASX: NAB) said (quoted by The Australian Financial Review), "US CPI was in line with expectations, but came as a relief for markets after a string of upside surprises."

NAB added, "Pricing for a September start to Fed easing firmed, the US dollar showed broad-based declines, and equities rose to fresh all-time highs."

CIBC Private Wealth's Gary Pzegeo said (quoted by Bloomberg):

The market likes it. The news on core inflation was better than expected. Retail sales also showed some deceleration from the previously hot consumer sector. Taken together, this supports a Fed rate-cut in the fall.

Nationwide's said Mark Hackett added:

Equity markets continue to show impressive resilience. The sustainability of the recent rally will rely on the belief that we are heading for a 'soft landing', with easing inflation and moderate growth.

So, with the S&P 500 at new record levels and the ASX 200 close to setting its own new record, can equities continue to rally in 2024?

According to Infrastructure Capital Advisors' Jay Hatfield, very much so.

Hatfield said:

We continue to believe that our 5,750 target on the S&P will prove to be conservative as global rate cuts and AI propel global stock and bond markets higher after global cuts commence, with the ECB to act in early June.

Hatfield's "conservative" end of 2024 target represents a potential upside of more than 8% for the S&P 500 over the next seven months.

One ASX share to capture the S&P 500 performance

There's a surprisingly simple way for Aussie investors to mirror the performance of the S&P 500 without buying all 500 large-cap companies in the US index. Namely, via an index-tracking ASX-listed exchange-traded fund (ETF), like the SPDR S&P 500 ETF Trust (ASX: SPY).

The ETF provides exposure to those 500 stocks with a single investment, aiming to track the performance returns of the S&P 500. Management costs come to just under 0.10% per year.

Over the past 12 months the ASX ETF is up 28%.

The post ASX 200 rockets higher on Thursday as S&P 500 smashes record highs appeared first on The Motley Fool Australia.

Since this time last year, the benchmark US index has soared 31.6%, closing down 0.1% on Friday at 5,234 points.

Spurred by strong earnings results amid a resilient US economy alongside investor exuberance over pending interest rate cuts from the US Federal Reserve as inflation comes off the boil, the S&P 500 has notched a series of new record highs this year.

It's a similar story with the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC). And, here in Australia, with the S&P/ASX 200 Index (ASX: XJO).

The ASX 200 is up 0.4% in afternoon trade today at 7,804.4 points. That puts the Aussie benchmark index within striking distance of surpassing the 8 March all-time closing high of 7,847.0 points.

Turning back to US markets, here's what Goldman Sachs says could send the S&P 500 soaring another 15% in 2024.

More big gains for the S&P 500 ahead?

To be clear, Goldman Sachs' base case remains for the S&P 500 to close the calendar year right around current levels, at 5,200 points.

But Goldman's analysts also foresee the possibility that ongoing investor exuberance with artificial intelligence could see the big tech stocks propel the index to 6,000 points by the end of 2024.

Or 14.6% above current levels.

According to Goldman's analysts (quoted by Bloomberg), "Although AI optimism appears high, long-term growth expectations and valuations for the largest TMT [technology, media, and telecom] stocks are still far from 'bubble' territory."

The broker also noted that the resilient US economy and potential Fed rate cuts have already been fully priced into the markets.

In order for the US benchmark index to soar to 6,000 points by year end then, they said, "A shift in the interest rate outlook without a deterioration in the economy is necessary for the market rally to broaden."

An ASX share to mirror the US stock market performance

ASX investors looking to track the performance of the S&P 500 without buying all those stocks may want to run their slide rule over the SPDR S&P 500 ETF Trust (ASX: SPY).

The ASX-listed exchange-traded fund (ETF) provides investors with exposure to 500 of the largest US-listed companies. SPY aims to track the performance returns of the benchmark. And it comes with low management costs of just under 0.10% per year.

Over the past 12 months, the ETF has gained 33.7%.

As always, before you invest a single dollar in SPY or any other ASX share, be sure to do your own thorough research.

If you're uncomfortable with that, or just don't have the time, reach out for some expert advice.

The post Up 32% in a year, here's why Goldman says the S&P 500 could soar another 15% in 2024 appeared first on The Motley Fool Australia.

But that doesn't mean we can't emulate his stellar success to get the most out of our ASX share portfolios.

At last count, Warren Buffett had amassed a personal fortune of US$115.6 billion (AU$169.8 billion), according to Forbes. That's an even more impressive feat considering the now 92-year-old investing guru began his journey to wealth with almost nothing.

And the Oracle of Omaha has used his legendary investing acumen to deliver more than 50 years of outperformance at Berkshire Hathaway.

Since stepping into the leadership of Berkshire Hathaway back in 1965, the Oracle's stock choices have gained an average of approximately 20% annually.

And he's done so employing a simple approach which he says, "makes the most sense, frankly, all of the time."

Part of the strategy embraced by Warren Buffett includes these three ridiculously simple steps that we can all use when investing in ASX shares.

Buy 'the investment universe'

Not everyone has the time or expertise to research all of the potentially lucrative opportunities on the ASX to sort the wheat from the chaff.

That's why Warren Buffett is a big fan of exchange-traded funds (ETFs). At least for retail investors, like you and me.

"American business is going to do fine over time, so you know the investment universe is going to do very well," he said.

To gain broad exposure to that, he recommends investing in an S&P 500 index fund. There are a few to choose from here on the ASX, including the SPDR S&P 500 ETF Trust (ASX: SPY).

SPY is intended to mimic the performance of the S&P 500. And it's tracking quite closely.

The S&P 500 is up 19.1% so far in 2023, while SPY has gained 19.3%.

According to Warren Buffett:

The trick is not to pick the right company, most people aren't equipped to do that, and plenty of times, I make mistakes. The trick is essentially to buy all the big companies through the S&P 500.

What other simple investing tips does Warren Buffett offer?

Atop buying all the big name stocks that he believes will, as a whole, perform well over time, the Oracle recommends being consistent. That means saving some money every day and buying ASX shares (including ETFs) every month or two.

That can be hard to do when the stock market is in a broader downtrend. But Warren Buffett says that shouldn't dissuade you.

"Keep buying it through thick and thin. Especially through thin," he said.

Which ties in nicely with one of his most famous sayings, "Be greedy when others are fearful."

So don't let bearish financial media headlines put you off when the market is struggling. Instead, take the Oracle's advice and, "Just keep buying it."

Which brings us to the third ridiculously simple Warren Buffett tip — keep your costs to a minimum.

To keep brokerage fees low as a percentage of your investments, it pays to invest in somewhat larger amounts.

And when it comes to management fees for ETFs, look for lows cost options.

"If returns are going to be 7% or 8% and you are paying 1% for fees, that makes an enormous difference in how much money you'll have by retirement," Warren Buffett said.

SPY fits the bill here, with relatively low management costs of 0.0945%.

The post 3 ridiculously simple Warren Buffett tips you can use to build wealth with ASX shares appeared first on The Motley Fool Australia.

Let's check them out.

15 ASX ETFs at 52-week highs today

First up we have the Vanguard MSCI Index International Shares ETF (ASX: VGS). This diversified fund covers more than 20 advanced economies from around the world, including Canada, the United Kingdom, France, Switzerland, Singapore, and Denmark. But most of its holdings are US shares, despite the fact that this fund has almost 1,500 individual companies within it.

VGS units touched $106.05 each this morning, which is this fund's new 52-week high.

Given the dominance of US shares in the Vanguard International Shares ETF, it's no surprise to see other US-based funds doing well today. Another ASX ETF that hit a new 52-week high this morning was the iShares S&P 500 ETF (ASX: IVV). IVV units hit a new high watermark of $44.12.

This S&P 500 ETF holds the largest 500 shares in the US by market capitalisation, so shares many of the same names as VGS, like Apple, Microsoft, NVIDIA, and Alphabet, in its top holdings. The SPDR S&P 500 Trust ETF (ASX: SPY) is virtually identical to IVV in terms of holdings, so it's not a shock to see SPY units hit a new high as well. In this case, our 52-week high comes in at $656.70.

Nor the BetaShares NASDAQ 100 ETF (ASX: NDQ), with its new high of $34.80. This ETF is a little different, tracking the 100 largest shares on the NASDAQ stock exchange. However, it still holds the US tech giants listed above as its top-weighted shares.

Also sharing many of those top holdings is the Vanguard US Total Market Shares Index ETF (ASX: VTS). This fund represents an investment in almost 3,900 US shares but is still dominated by those same names. So again, no one should be taken aback by seeing VTS units at a new 52-week high of $326.70 today.

Our final funds at new highs

It's again a similar story with the Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG). This fund is very similar in nature to the Vanguard MSCI Index International Shares ETF. However, it omits companies like oil shares, tobacco shares, and other 'ethically challenged' companies. But it still holds the US tech giants as its largest investments. VESG units hit a new high of $74.38 this morning.

Similarly, the BetaShares Global Sustainability Leaders ETF (ASX: ETHI) is also having a top day. Again, this ETF holds a basket of the world's largest shares, selected using ethics criteria. The new 52-high for this one sits at $12.72.

Next up is a very similar ASX ETF in the iShares Core MSCI World ex-Australia ESG ETF (ASX: IWLD). This fund is provided by BlackRock and represents a similar investing mandate of choosing the world's largest companies from advanced economies with an ethical bias. IWLD units touched a new 52-week high of $45.60 this session.

Our next ETF to examine today is cut from a different cloth. The VanEck MSCI International Small Companies Quality ETF (ASX: QSML) is a fund that has a portfolio of around 150 different small companies that fulfil certain 'quality' metrics, such as a high return on equity and low leverage. QSML units hit a new 52-week high of $23.53 earlier today.

Onto our final six ETFs at new 52-week highs today are as follows:

• Global X Battery Tech & Lithium ETF (ASX: ACDC) with a new 52-week high of $105.99
• BetaShares S&P 500 Equal Weight ETF (ASX: QUS) at $43.39
• Global X Morningstar Global Technology ETF (ASX: TECH) at $92
• VanEck Morningstar Wide Moat ETF (ASX: MOAT) at $120.18
• BetaShares Global Quality Leaders ETF (ASX: QLTY) at $24.09
• BetaShares Global Shares ETF (ASX: BGBL) at $53.21

The post 15 ASX ETFs smashing new 52-week highs on Wednesday appeared first on The Motley Fool Australia.

The S&P 500 was launched in 1957 and currently houses around 500 large-cap US stocks.

However, as it now stands, the index is notably concentrated, Morgan Stanley chief investment officer for wealth management Lisa Shalett warns. Here's where she suggests investors put their money when working to diversify their portfolios instead.

ASX ETFs can boast built-in diversification

Portfolio diversification is one of the simplest and most effective ways to reduce the risks born from investing. It essentially means not putting all your eggs in one basket.

By spreading your wealth across numerous stocks operating in different sectors, or listed on different markets, one might be better prepared in the case of a single company, or sector, downturn.

On the other hand, ETFs are essentially a parcel of various stocks, housed in a fund that trades like a share.

ETFs like iShares S&P 500 ETF (ASX: IVV) and SPDR S&P 500 ETF (ASX: SPY) have built parcels of stocks with the aim of mirroring the S&P 500.

So, with the S&P 500 covering around 80% of the US stock market's available market capitalisation, why wouldn't an ETF tracking it be a good diversification buy for ASX investors?

S&P 500 doesn't offer worthwhile diversification: Expert

Well, the S&P 500 might not be as diversified as it might seem, Shalett recently wrote for Morgan Stanley.

That's because of the burgeoning valuations of the US's biggest tech stocks.

Investors have flocked to companies like Apple Inc (NASDAQ: AAPL), Microsoft Corp (NASDAQ: MSFT), and Amazon.com Inc (NASDAQ: AMZN). They're considered defensive buys amid current economic uncertainty, the expert noted.

The below chart shows how the three stocks have risen over the last four months. The vertical axis represents the percentage gained:

The S&P 500 we know and love is weighted by valuation. That means massive growth from the index's 10 largest companies sees them make up almost 35% of its market cap. Shalett wrote:

This means that money deployed into the market-cap-weighted S&P 500 is increasingly a wager on the health of just a few companies—with the fundamentals of the other 490 carrying less weight.

Not to mention, the ten giants are said to have an average price-to-earnings (P/E) ratio of 28. Meanwhile, the trio mentioned above boast a mind-blowing P/E of 66. That's compared to the index's average of around 19.

That means the company's earnings are expected to stay high – a factor that's said to be dependent on low interest rates. Thus, if rates stay high for longer than anticipated, it could prove dire for the stocks.

If not the S&P 500, then what?

So, where does Shalett think investors looking to diversify put their hard-earned money?

She sees opportunities in small-cap stocks, value shares, cyclical companies, and emerging markets.

The post Buying an S&P 500 ETF to diversify your ASX investments? You'll want to know this appeared first on The Motley Fool Australia.