The S&P 500 is a stock market index that tracks the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Today, I want to discuss why Canadians should consider following their own American dream by investing in the top companies south of the border. These are elite global players that can help carve out a bright future for your portfolio. Let’s jump in.
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Why Canadians should pursue the American dream with the S&P 500
Investors who have bet against the United States over the long term have paid with their wallets in the modern era. Indeed, the historical chart of the S&P 500 illustrates how dependable it has been for decade after decade. Later in this piece, I want to provide a historical price chart for a fund that currently tracks the performance of the S&P 500.
U.S. indexes, particularly the S&P 500, have been fantastic performers since the 2007-2008 financial crisis. The U.S. Federal Reserve, the country’s central bank, pressed forward with historic quantitative easing programs that boosted valuations and made index investors look like geniuses. Central banks in the U.S. and Canada have recently pursued an aggressive interest rate and quantitative tightening program to combat rising inflation. However, investors should still be attracted to the monster blue-chip equities available on this index.
The S&P 500 grants you access to the world’s corporate titans
Apple (NASDAQ: AAPL) is one of those rare companies that requires no introduction. This hardware giant boasts a nearly $3 trillion valuation and has proven more than capable of delivering impressive long-term earnings growth in the Tim Cook era. Apple is currently the top dog on the S&P 500. Its shares have climbed 5.8% month over month as of close on June 5.
Amazon.com (NASDAQ: AMZN) is another blue-chip beast that Canadians might want to target on the S&P 500. The retail titan has branched into sectors like streaming, grocery, and defence with impressive degrees of success. Shares of Amazon have shot up 46% so far in 2023 at the time of this writing.
Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is an American multinational conglomerate that was founded as a holding company by Warren Buffett. Since then, Buffett has solidified his Midas touch reputation among investors, as Berkshire has targeted some of the most dependable companies in North America and around the world. This stock has increased 6% in the year-to-date period.
Here is a TSX-listed ETF that lets you track this super American index
Instead of snatching up specific blue-chip stocks, Canadians might want to pursue their own American dream by snatching up exchange-traded funds (ETFs) that are listed on the TSX yet offer the chance to track the performance of the S&P 500.
Canadians who want to pursue this strategy should consider BMO S&P 500 Index ETF (TSX: ZSP). This fund seeks to replicate the performance of the S&P 500 Index, net of expenses. Its shares have climbed 3.9% month over month as of close on June 5. The ETF is up 10% so far in 2023. This fund offers a cheap MER of 0.09%.
This fund has achieved annualized returns of 16% since its inception on November 14, 2012. In addition to the stocks I’ve already covered, investors may recognize other top holdings like Microsoft, Alphabet, and Tesla.
