What holds up: Vanguard’s S&P 500 ETF charges 0.03% a year, and S&P’s own scorecard shows 92.6% of active US large-company funds trailing the index over the 20 years to June 2026.
The asterisk: you take all 500 companies, with no ethical screen. Through the fund you own a slice of the four largest US arms producers and of the oil drillers.
The 10% a year since 1957 is the return on that whole list, dividends included. ExxonMobil is about 1% of it, and about 1.9% with Chevron and ConocoPhillips. The whole energy sector was 3.4% in September 2026, roughly US$2.3 trillion.
The S&P 500Standard and Poor’s 500. An index of 500 large US companies, kept by S&P Dow Jones Indices. is a list of 500 large US companies kept by S&P Dow Jones Indices, whose factsheet describes it as “widely regarded as the best single gauge of large-cap U.S. equities”.
what it does well
The cost is low. Vanguard’s S&P 500 ETF, listed in the US as VOO, shows an expense ratio of 0.03% as at 28 April 2026. On the ASX, BlackRock’s iShares S&P 500 ETF shows a management fee of 0.04%.
It is hard to beat. S&P’s SPIVA scorecard for mid-2026 found 67% of active US large-company funds did worse than the index in the first half of 2026, 83% over ten years and 92.6% over twenty, after their fees and counting the funds that closed.
Warren Buffett’s 2013 letter to Berkshire Hathaway shareholders says his will tells the trustee to put “90% in a very low-cost S&P 500 index fund”. Vanguard, under founder John C. Bogle, opened the first index fund for individual investors in 1976.
hold on to this one
the part that holds up
Cheap, broad and hard to beat: nothing on this page argues with any of it.
you own everything
An index fundA fund that copies a share market index, like the S&P 500, instead of trying to beat it. does not choose. Vanguard says its fund “holds all stocks in the same capitalization weighting as the index”, so the bigger the company, the more of your money sits in it.
Ethics do not come into the list. S&P’s methodology sets tests of size, trading and profit, and a committee makes the final choice. Asked whether the index takes environmental, social or governance factors into account, the document answers “No.”
So through the fund you own a slice of the oil drillers and the weapons makers. That is ownership rather than finance. ASIC’s Moneysmart says that with an ETF “you own a stake in the ETF”, and the ETF owns the shares. Buying units hands those companies no new money, because the shares already exist and change hands between investors.
the 10% a year
S&P’s brochure for the index, on data to 30 June 2025, says it “has posted an annualized price return of around 7% since it launched on March 4, 1957, and a 10% total return over the same period”. The 10% includes dividends, reinvested. Both figures are in US dollars, before inflation and before any fund’s fees.
That return belongs to one list. S&P says the index “covers approximately 80% of available market capitalization”, which is most of the US share market and not the whole of it. Its factsheet for 30 September 2026 values the companies in it at US$68.4 trillion.
the fossil fuel holdings
S&P’s factsheet puts the energy sector at 3.4% of the index on 30 September 2026. State Street’s fund of that sector describes it as “oil, gas and consumable fuels; and energy equipment and services”, 21 companies in all. The three largest are ExxonMobil, Chevron and ConocoPhillips: 1.01%, 0.61% and 0.23% of State Street’s S&P 500 fund on 2 October 2026, in its daily holdings spreadsheet. That is about 1.9% between them, a little over half the sector.
In dollars, S&P valued the index’s companies at US$68.4 trillion on 30 September 2026, and 3.4% of that is roughly US$2.3 trillion. That is the whole energy sector, all 21 companies, and it is their market value, which is a different thing from money paid to them by index investors.
ExxonMobil’s 2025 results report production of 4.7 million oil-equivalent barrels a day, its highest level in more than 40 years, and its climate report says it is pursuing about US$20 billion of lower-emission investments from 2025 to 2030.
These weights move every trading day. For today’s, open State Street’s fund page rather than relying on an article.
the weapons makers
The Stockholm International Peace Research Institute ranks arms companies by their sales to military customers. Its ranking for 2024 has Lockheed Martin first in the world, RTX second, Northrop Grumman third and General Dynamics fifth. In State Street’s spreadsheet for 2 October 2026 they were, in that order, 0.15%, 0.37%, 0.10% and 0.13% of the S&P 500 fund: 0.75% between them, or $7.50 in every $1,000.
On SIPRI’s figures, arms were 91% of Lockheed Martin’s revenue in 2024, 92% of Northrop Grumman’s, 70% of General Dynamics’ and 54% of RTX’s. Lockheed Martin builds the F-35 fighter, RTX’s Raytheon business the Patriot air and missile defence system and Northrop Grumman the B-21 bomber.
the top ten
On 30 September 2026 the ten largest lines in the index made up 39.1% of it, on S&P’s factsheet: Nvidia, Apple, Microsoft, Amazon, Alphabet twice, Broadcom, Meta, Micron and Tesla. Nvidia alone was 8.4%.
S&P’s own research says the ten largest companies had reached “almost 40% of the index by mid-2025, a level of concentration not seen since the mid-1960s”. It also makes the case for weighting by size: if the giants falter, “their weights in the benchmark will naturally decline”. Microsoft, Amazon and Nvidia come up again in chatgpt* the clearance.
what this means for your money
There are screened versions of the index, each with fine print of its own. State Street’s S&P 500 ESG fund follows an index that excludes companies involved in “small arms, tobacco, thermal coal, controversial weapons, military contracting and oil sands”, and still showed 2.9% in energy on 2 October 2026. Its S&P 500 Fossil Fuel Reserves Free fund, which leaves out companies that own fossil fuel reserves, showed 1.2% in energy, and its holdings spreadsheet lists all four arms producers above.
If your super is where you meet the index, super funds* the default is the next thing to read.
inaam works the other way round from an index. Rather than owning everything by size, a company has to earn its way in on three checks, financial robustness, purposeful impact and leadership calibre, which are set out on how it works. Every holding is named in the app with the reason it got in and the trade-off next to it. Members customise the five themes for themselves, and the themes are set out on investment areas. The subscription is $10 a month, which is $120 a year, and it is separate from the money you invest. The minimum to invest in the fund is $100. Sign-up happens in the app, not on this website. SMSFs and family trusts are welcome.
None of this makes an index fund a bad idea. It is worth knowing what is on the list before you buy it.
key sources
S&P 500 factsheet · S&P 500 brochure · SPIVA mid-2026 · State Street holdings · Vanguard · Berkshire Hathaway · SIPRI · ExxonMobil
General information only. It does not take your objectives or circumstances into account. Consider the PDS and TMD, and we recommend independent advice, before investing. This article is general information only and does not constitute financial advice. Readers should do their own research before making investment decisions. The inaam Impact Investments Fund is ARSN 691 614 132. inaam is not affiliated with S&P Dow Jones Indices, Vanguard, or any entity discussed in this article.
