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There have been ups and downs, however over time America’s S&P 500 has proved itself a high vacation spot for buyers looking for great returns.
Since 2010, the share index has delivered a median annual return of virtually 14%. Returns throughout this time have been supercharged by its massive contingent of high-growth tech shares like Nvidia, Microsoft and Tesla.
However doubts are creeping in as as to whether the S&P 500 can preserve its report. This follows plans by US President Donald Trump to impose probably crushing commerce tariffs on main buying and selling companions.
What does this imply for buyers?
Stark warning
Scanning the monetary pages this morning (17 February), I used to be drawn to an interview with Nobel prize-winning economist Joseph Stiglitz.
Discussing potential US tariffs and reciprocal taxes from commerce companions, he mentioned that “it dangers the worst of all potential worlds: a type of stagflation.”
Stiglitz mentioned that uncertainty associated to Trump’s commerce plans would gradual financial development, whereas new tariffs might additionally push up prices for enterprise and shoppers.
He commented that “how a lot it should improve costs is just a little bit affected by the magnitude of the appreciation of the trade price, however all economists assume that the extent of the appreciation of the trade price gained’t be wherever close to sufficient to compensate for the tariffs.“
Don’t panic but
Buyers should be additional cautious on this local weather. Nonetheless, I really feel there’s additionally no want for them to panic.
First, there’s no assure that new commerce guidelines will come into place. Trump’s determination to delay tariffs on Mexico and Canada final month signifies room for manoeuvre.
There’s one other essential factor to recollect. Whereas economists like Stiglitz deserve consideration, we’ve seen many instances earlier than that predictions of doom and gloom may be overstated.
So, is the S&P 500 nonetheless a sexy place to contemplate investing? I believe so, which is why I plan to proceed holding US shares, trusts and funds.
Spreading threat
Whereas the outlook is extra unsure at present, there are nonetheless good causes to count on S&P shares to outperform over the long run. These embrace:
- The robustness of the US economic system.
- Additional fast development within the digital economic system that powers tech income.
- Dominance by S&P 500 firms in main sectors like healthcare, finance and expertise.
- The S&P’s massive world footprint offering added earnings alternatives.
It’s additionally essential to recollect the robustness of the US inventory market over time. Since its inception in 1957, the S&P 500 has overcome a number of crises — together with wars, recessions, pandemics and political turmoil — and has hit new report highs in 2025 regardless of tariff worries.
Nonetheless, cautious buyers might want to contemplate shopping for an index-tracking exchange-traded fund (ETF) in addition to buying particular person shares at present. The HSBC S&P 500 ETF (LSE:HSPX) is one I maintain in my very own portfolio.
By investing in a whole bunch of various firms, the fund helps buyers handle a low-growth state of affairs by way of holdings in cyclical and non-cyclical companies. It additionally contains industries which might be much less weak to inflationary pressures, like client staples and healthcare.
Lastly, the fund limits publicity to sectors that could possibly be immediately impacted to a big diploma by commerce tariffs, such because the automobile trade and agriculture.
This HSBC product isn’t proof against financial volatility. However over the long run, I nonetheless consider it might proceed delivering glorious returns.
