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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 traders looking for super returns.
Since 2010, the share index has delivered a median annual return of just about 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 document. 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 traders?
Stark warning
Scanning the monetary pages this morning (17 February), I used to be drawn to an interview in The Guardian with Nobel prize-winning economist Joseph Stiglitz.
Discussing potential US tariffs and reciprocal taxes from commerce companions, he stated that “it dangers the worst of all potential worlds: a form of stagflation.”
Stiglitz stated that uncertainty associated to Trump’s commerce plans would sluggish financial progress, whereas new tariffs might additionally push up prices for enterprise and shoppers.
He commented that “how a lot it can enhance costs is slightly bit affected by the magnitude of the appreciation of the change charge, however all economists assume that the extent of the appreciation of the change charge received’t be wherever close to sufficient to compensate for the tariffs.“
Don’t panic but
Traders 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 occasions earlier than that predictions of doom and gloom could be overstated.
So, is the S&P 500 nonetheless a sexy place to think about investing? I feel so, which is why I plan to proceed holding US shares, trusts and funds.
Spreading threat
Whereas the outlook is extra unsure right this moment, there are nonetheless good causes to count on S&P shares to outperform over the long run. These embrace:
- The robustness of the US financial system.
- Additional speedy progress within the digital financial system that powers tech income.
- Dominance by S&P 500 corporations in main sectors like healthcare, finance and expertise.
- The S&P’s massive international 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 document highs in 2025 regardless of tariff worries.
Nonetheless, cautious traders could want to contemplate shopping for an index-tracking exchange-traded fund (ETF) in addition to buying particular person shares right this moment. The HSBC S&P 500 ETF (LSE:HSPX) is one I maintain in my very own portfolio.
By investing in a whole lot of various corporations, the fund helps traders handle a low-growth situation via holdings in cyclical and non-cyclical companies. It additionally contains industries which are much less weak to inflationary pressures, like shopper staples and healthcare.
Lastly, the fund limits publicity to sectors that may very well be instantly impacted to a big diploma by commerce tariffs, such because the automotive business and agriculture.
This HSBC product isn’t proof against financial volatility. However over the long run, I nonetheless imagine it might proceed delivering wonderful returns.
