Either one is a sound foundation. A global tracker and an S&P 500 tracker are both cheap, both diversified, both better than what most people are doing with their money — and the difference between them is smaller than the argument about them suggests. I hold the S&P side myself, and I’ll show you why, but this is a choice between two right answers.
The wrong answer is spending six months deciding.
What each one actually holds
An S&P 500 fund owns the 500 biggest companies in America — the first thing I’d buy, and the fund I actually hold.
A global tracker — the FTSE All-World funds are the common ones — owns around 4,000 companies across the world: America, Europe, Japan, the UK, emerging markets. One fund, the whole planet. It sounds like a completely different animal.
It isn’t. America is 62% of the global index.
Buy the world and you’ve still mostly bought America. The global tracker isn’t an alternative to the S&P 500 — it’s the S&P 500 with a side order.
And because the same giants sit at the top of both, roughly a fifth of a global tracker is still the Magnificent Seven — my estimate from the index weights, but it won’t be far off. If you were hoping “global” meant escaping big American tech, it doesn’t. It means diluting it.
The bet you’re making
The honest difference is this. The S&P 500 is a bet that the companies that have won keep winning. The global tracker is an admission that you don’t know — so you own everyone, and whoever wins the next decade, you hold them.
There’s a respectable case for the second view right now. The US index is historically concentrated, and Goldman Sachs has pencilled in around 3% a year for the S&P over the coming decade because of it. I take that concern seriously — it’s why I moved my own core to an equal-weight version of the S&P rather than the standard one. A global tracker is another reasonable response to the same worry.
The counter is just as real: America’s giants aren’t winning by accident. They earn around thirty per cent of the S&P’s profits, and the last decade of “surely the rest of the world catches up now” cost everyone who acted on it. Nobody knows which way the next decade goes — and the people who sound certain are selling something.
What they cost
The S&P side is cheaper. VUAG costs 0.07% a year. The global trackers run from about 0.12% (HSBC’s All-World index fund) through 0.15% (Invesco’s FWRG) to 0.19% (Vanguard’s VWRP).
On a £20,000 ISA that’s a difference of £10 to £24 a year. Real, but not a reason to pick one over the other — that’s the £40 decision, and the £10,000 decision is starting at all.
So which one?
If you want one fund, no opinions, and never a moment’s thought about geography: buy the global tracker. It’s the purest version of “own everything and get on with your life”, and nobody ever went wrong holding it.
If you’re comfortable leaning on America — on the view that the world’s most profitable companies will stay that way — the S&P 500 does it for less money. That’s my side of the line, with my own money.
What you shouldn’t do is hold the decision open. Money sitting in savings while you deliberate loses more every month than the worst version of either choice would cost you in a decade.
The expensive mistake isn’t picking the wrong index. It’s spending six months choosing.
This is what I write about every week — managing your own money without paying someone 1–2% a year to do it worse. The letter is free.
I am not a financial adviser. Nothing here is personal financial advice. This is my own experience and opinion, shared for information and education. Investing involves risk — the value of investments can fall as well as rise, and you may get back less than you put in. Please do your own research before acting.