S&P 500 vs FTSE 100: Which Index Has Performed Better?
Compare the S&P 500 and FTSE 100 on long-term returns, dividend yields, sector composition and what each index actually represents.
What Each Index Tracks
The S&P 500 is a market-cap-weighted index of the 500 largest US-listed companies, covering roughly 80% of US stock market capitalisation. It is the de facto benchmark for US equities and global large-cap stocks.
The FTSE 100 is a market-cap-weighted index of the 100 largest companies listed on the London Stock Exchange. Despite its UK listing, around 75% of FTSE 100 revenue comes from outside the UK — making it more an international large-cap index than a pure UK economic gauge.
Composition Comparison
| Sector | S&P 500 Weight | FTSE 100 Weight |
|---|---|---|
| Technology | ~30% | ~1% |
| Financials | ~13% | ~19% |
| Health Care | ~12% | ~11% |
| Consumer Discretionary | ~11% | ~9% |
| Energy | ~4% | ~12% |
| Consumer Staples | ~6% | ~16% |
| Industrials | ~9% | ~11% |
| Materials | ~2% | ~8% |
The defining structural difference is that the S&P 500 is dominated by technology and the FTSE 100 by financials, energy, materials and consumer staples — "old economy" sectors that have grown more slowly over the past 15 years.
Long-Term Total Returns
Total return includes price change plus reinvested dividends. Approximate annualised total returns in local currency to end of 2024:
| Period | S&P 500 (USD) | FTSE 100 (GBP) | Difference |
|---|---|---|---|
| 10 years | ~13.0% | ~5.5% | +7.5% |
| 20 years | ~10.0% | ~5.5% | +4.5% |
| 30 years | ~10.5% | ~6.5% | +4.0% |
The gap is large in both percentage and pound terms. £10,000 compounded at 10.5% for 30 years becomes £200,000; at 6.5% it becomes £66,000.
Why the S&P 500 Has Outperformed
- Technology weighting. The biggest driver. The S&P 500's tech-heavy makeup captured the explosion in software, cloud and AI; the FTSE 100 has barely any of it.
- Reinvestment culture. US firms ploughed earnings into growth; many UK firms returned them as dividends, which is good for income but slower for capital growth.
- USD strength. Over the past 15 years the dollar has appreciated against most currencies, lifting US returns when measured in GBP.
- Regulatory and tax environment — broadly more capital-formation-friendly in the US over this period.
- Listing decline of fast growers in London. Many UK technology and biotech companies have listed on Nasdaq instead of LSE.
Dividend Yield Comparison
The FTSE 100 has historically had a much higher dividend yield than the S&P 500 — roughly 3.5–4.0% versus 1.3–1.7% respectively in recent years. For income-focused investors that can be appealing. But the S&P 500's lower yield is partly because firms reinvest profits instead — and historically that has produced a higher total return.
Currency Risk for UK Investors
Buying a US-listed S&P 500 ETF gives you exposure to the US dollar. If the dollar weakens against sterling, returns are reduced when measured in GBP. Over the long term, currency moves are roughly a wash, but they can dominate returns over a few years.
UK investors can either:
- Buy GBP-listed S&P 500 ETFs and accept the FX exposure
- Buy GBP-hedged S&P 500 ETFs (e.g. those with "GBP Hedged" in the name) which strip out FX moves at a small annual cost
The Diversification Argument
Past outperformance does not guarantee future outperformance. UK equities have traded at steep valuation discounts to US equities for over a decade, which historically has been a good leading indicator of stronger forward returns. Holding both — or buying a global index fund such as MSCI World or FTSE All-World which contains both — sidesteps the question entirely.
Which to Buy and How
For most investors, the cleanest approach is a single global index ETF that contains both markets weighted by market cap (currently ~62% US, ~3.6% UK). Examples:
- VWRL / VWRP — Vanguard FTSE All-World UCITS ETF
- VEVE — Vanguard FTSE Developed World
- SWDA — iShares Core MSCI World
If you want pure-play exposure:
- S&P 500: VUSA, CSPX (UCITS); VOO, IVV, SPY (US-listed)
- FTSE 100: ISF, VUKE, HUKX
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