Is This ETF the Best Way to Invest in the S&P 500 in 2026?

The S&P 500 (SNPINDEX: ^GSPC) is arguably the banal market's astir important index. Tracking astir 500 of the largest American companies connected the market, it has agelong been a mode that radical get a peek into the wellness of the U.S. system (though the 2 are not straight tied).

After slipping into a little correction amid the Trump administration's tariff program successful April, the S&P 500 has bounced backmost impressively. Through Dec. 12, the scale is up implicit 17% twelvemonth to date.

On 1 hand, I'm definite investors admit the tally the S&P 500 is on. On the different hand, it has brought connected caller risks related to the index's valuation and the creation of its holdings. Given those risks, is present the clip to see an alternate mode to put successful the S&P 500? Let's instrumentality a look.

The S&P 500's level unsocial isn't a mode to gauge however costly oregon inexpensive it is. A communal attack is to look astatine the Shiller price-to-earnings (P/E) ratio, sometimes known arsenic the CAPE ratio. This metric examines the S&P 500's inflation-adjusted net per stock (EPS) implicit the past 10 years, aiming to supply penetration into the index's valuation without being influenced by one-off events that tin beryllium misleading.

At the clip of this writing, the Shiller P/E ratio is 40.6, a level it has deed erstwhile before. And unfortunately, the past clip resulted successful the dot-com crash. Of course, past show doesn't warrant aboriginal performance, but it makes consciousness that the correlation would punctual immoderate investors' caution.

Another contented with the existent S&P 500 is however top-heavy it has go since larger companies relationship for much of the scale than smaller ones. That has caused ample tech stocks to beryllium heavy represented. Based connected the Vanguard S&P 500 ETF, present are the index's apical 10 holdings:

Source: Vanguard. Percentages arsenic of Oct. 31.

The S&P 500 is expected to correspond the broader U.S. system -- which it inactive does to a definite grade -- but having 10 companies relationship for implicit 40% of the scale isn't perfect from a diversification standpoint. This is particularly existent erstwhile the apical 3 holdings themselves relationship for astir 22%.