If you are from the UK and are learning about investing, there’s a good chance a lot of the people you follow and websites you read will be tailored towards the American market.
When it comes to applying these investing strategies in the UK market, things can get confusing as popular funds such as SPY are not available. In this article, we’ll take a look at some SPY alternatives in the UK and Europe.
Quick Overview
SPY aims to follow the S&P 500 index. It’s not available in the UK due to regulatory requirements however there are UK funds that have the same goal of tracking the S&P 500. A great option is VUSA which is a UK-based ETF by Vanguard.
Why Is SPY Not Available In The UK?
Before we take a look at some of the SPY alternatives let’s take a look at why you can’t purchase SPY in the UK.
Funds in the UK & Europe need to abide by a regulatory framework called UCITS (Undertakings for Collective Investment in Transferable Securities). This is a European Union regulation.
When you look at many ETFs in the UK you will see UCITS in the name.
US funds do not have to follow these same regulatory requirements and therefore don’t meet the regulations. This is why they are unavailable in UK markets.
For most funds, there is a UK or EU equivalent fund you can invest in. While it may not be under the exact same name, it has the same goal as its US counterpart.
What Is SPY?
SPY is a State Street Global Advisor fund that tracks the S&P 500. These are the 500 largest companies in the United States. SPY was the very first exchange-traded fund in America, launching in 1993.
The two big benefits to SPY are diversified exposure to the US market as well as a very inexpensive fee structure. The SPY ETF has annual operating expenses of only 0.0945%.
Historically the S&P 500 has returned an average of over 10% per year over the past 50 years. While past performance is not indicative of future results, the S&P 500 has a pretty good track record. If you believe in the American economy going forward and want a diversified portfolio of stocks without having to buy them individually, an S&P 500 tracking fund such as VOO is a great option.
SPY Alternatives In The UK
Now we know what SPY is, let’s take a look at some ETFs in the UK that follow the S&P 500 index. Luckily there is a wide range of them to choose from.
VUSA
VUSA is a UK fund that tracks the S&P 500 index. It can be found under the ticker symbol VUSA on most major brokerages. This ETF has ongoing charges of 0.07% which isn’t as cheap as the US counterpart but overall isn’t bad. Keep in mind, that your brokerage may charge extra fees on top of the fund fees.
Dividends in this fund are distributed, meaning you will receive dividend payments from the underlying holdings. If you want to re-invest the dividends you will have to do this manually.
This fund is managed by Vanguard.
IUSA
IUSA is another UK fund that tracks the S&P 500. It can be found under the ticker symbol IUSA on most major brokerages. It also has an ongoing fee of 0.07% which allows you to invest at a low cost. Your brokerage may charge extra fees on top of this.
Dividends in this fund are distributed, meaning you will receive dividend payments from the underlying holdings. If you want to re-invest the dividends you will have to do this manually.
This fund is managed by iShares by Blackrock.
VUAG
VUAG also tracks the S&P 500. It can be found under the ticker symbol VUAG on most major brokerages. It also has a fee of 0.07% which is great. While this fund is also managed by Vanguard there is one slight difference in it compared to VUSA. VUAG automatically re-invests your dividends.
I don’t need cash flow right now in my portfolio so I usually purchase Accumulating funds as it takes the hassle out of having to re-invest.
You may also be interested in our article on the Best Index Funds For UK Investors
Where Can You Buy These Funds?
These funds are available on most major brokerage platforms. In my opinion, one of the best places to invest in funds at a low cost is Invest Engine.
They don’t offer individual stocks, however, they do offer fee-free investing in funds. You can check out our full Invest Engine review to learn more.
Invest Engine is a zero-fee investing platform for ETFs as well as offering managed funds for more passive investors. They have a sleek, easy-to-use platform which makes building your portfolio a breeze. With no platform fees and over 550 ETFs on offer, we highly recommend Invest Engine.
- Fee free investing for DIY portfolios
- 0.25% Managed Portfolio Fees
- 550+ ETFs Available
- Auto-investing with savings plans
- Easy to use
- No pension plan
- Only offers ETFs
Final Thoughts
Overall, there are plenty of alternatives to SPY in the UK. If you want a fund that distributes dividends then VUSA is a good choice or if you want a fund that automatically re-invests your dividends VUAG is also a great option.
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