the s&p 500*
the index

the index

The S&P 500Standard & Poor's 500. An index that tracks 500 of the biggest companies in the US. When people say "the market," they usually mean this. It's the benchmark almost everything gets compared to. tracks 500 of the largest publicly traded companies in the United States, maintained by S&P Dow Jones Indices. As of early 2025, it represented roughly US$50 trillion in total market capitalisation, covering approximately 80% of available U.S. equity market value.

When people say "the market was up today," they usually mean the S&P 500. It's become shorthand for American capitalism itself.

the good stuff

The S&P 500 has delivered an average annualised return of roughly 10.26% since 1957. No active fund manager has consistently beaten it over a 20-year period, which is why Warren Buffett has spent decades telling ordinary investors to just buy an S&P 500 index fundA fund that copies a stock market index (like the S&P 500) instead of trying to beat it. You get the whole market, good and bad. and leave it alone.

Low-cost index funds, pioneered by Jack Bogle at Vanguard in 1976, turned the S&P 500 from a benchmark into a product. Today you can buy the entire index for an expense ratio of 0.03%. Index investing has arguably done more to democratise wealth building than any single financial product in history.

you own everything

When you invest in an S&P 500 index fund, you don't get to pick. You buy all 500 companies in proportion to their market cap weight. The fund manager doesn't screen for ethics, environmental impact, or labour practices. That's the entire point of passive indexing.

So your retirement savings, your child's education fund, your monthly investment habit: all of it flows proportionally into every company in the index. Including the ones making weapons. Including the ones drilling for oil. You didn't choose those companies. But you own them.

the fossil fuel holdings

The S&P 500's energy sector represented approximately 3.4% of the index as of late 2024. Major fossil fuel companies include ExxonMobil (~1.2%), Chevron (~0.7%), and ConocoPhillips (~0.3%).

ExxonMobil alone produced 3.7 billion barrels of oil equivalent in 2023. When you own the index, you own a proportional share of that output. Not metaphorically. Literally.

the weapons manufacturers

The S&P 500 includes every major American defence contractor. Lockheed Martin, RTX Corporation (formerly Raytheon), Northrop Grumman, General Dynamics. Combined, aerospace and defence companies account for roughly 1.5-2% of the index.

RTX manufactures the Patriot missile system. Lockheed Martin builds the F-35 fighter jet. Northrop Grumman produces the B-21 stealth bomber. These aren't side projects. They are the core revenue streams.

the concentration problem

As of early 2025, the top 10 holdings accounted for approximately 37% of the entire index. The "Magnificent 7" (Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, Tesla) alone represented roughly 30%.

When you "diversify" into the S&P 500, more than a third of your money goes into ten companies. Apple alone has been as high as 7%. The bottom 200 companies combined might equal the weight of a single top-5 holding.

what this means for your money

Passive investing gets treated as a neutral act. But buying the market is a choice with specific consequences. You're choosing to allocate capital in exact proportion to what's already large, regardless of what those companies do.

Alternatives exist. ESG-screened indices like the S&P 500 ESG Index exclude the lowest-scoring companies. Fossil-fuel-free funds exist. So do indices that exclude weapons manufacturers.

At inaam, we build curated portfolios that screen for the things that matter to our members. You get market exposure without the fossil fuels, without the weapons, and without pretending that passive means neutral. Consider our PDS and TMD before making any investment decisions.