How Malaysians Can Start Investing in the S&P 500

The S&P 500 is one of the world’s most popular stock market indexes, representing 500 of the largest and most influential companies in the United States. For investors in Malaysia, gaining exposure to the S&P 500 is an effective way to diversify beyond local markets and tap into the long-term growth of the U.S. economy.

The performance difference speaks for itself. Over the past 10 years, the S&P 500 delivered an annualised 10.47% return, while Malaysia’s benchmark index, the FBM KLCI, sees an annualised return of -1.82%. This stark contrast makes the S&P 500 a far more attractive investment option for those looking to grow their wealth consistently.

Fortunately, Malaysians have several easy ways to invest in the S&P 500 — through exchange-traded funds (ETFs), unit trusts, or robo-advisors — each with its own pros and cons. In this guide, we’ll break down everything you need to know to get started.

What is the S&P 500?

The S&P 500 is a stock market index that tracks 500 of the largest publicly traded companies in the United States. It serves as a benchmark for the overall U.S. stock market and represents approximately 80% of the total U.S market capitalization.

As of March 2025, the S&P 500 has a total market capitalization of about $ 48.5 trillion and consists of 503 stocks issued by 500 large-cap U.S. companies. This discrepancy occurs because some companies have multiple share classes included separately in the index.

The S&P 500 Index is dominated by major sectors such as Information Technology (29.2%), Financials (13.1%), and Healthcare (12.3%), reflecting the key drivers of the U.S. economy.

Top 10 Companies in the S&P 500

1. Apple Inc. (AAPL)
2. Nvidia Corp. (NVDA)
3. Microsoft Corp. (MSFT)
4. Amazon.com Inc. (AMZN)
5. Meta Platforms Inc. Class A (META)
6. Alphabet Inc. Class A (GOOGL)
7. Alphabet Inc. Class C (GOOG)
8. Berkshire Hathaway Inc. Class B (BRK.B)
9. Tesla Inc. (TSLA)
10. UnitedHealth Group Inc. (UNH)

The index is widely followed by investors worldwide due to its historical long-term growth, stability, and diversification across industries. Investing in the S&P 500 provides exposure to some of the world’s largest and most successful companies, making it a popular choice for long-term wealth building.

Why invest in S&P 500? 

Investing in the S&P 500 is a popular strategy for both seasoned and beginner investors due to its diversification, historical stability, and strong long-term returns. Malaysian investors looking to gain exposure to the U.S. market can benefit from this index, which represents 500 of the largest publicly traded companies in the United States across various industries.

Diversification & Exposure to Global Leaders

The S&P 500 provides exposure to some of the world’s most influential and dynamic companies, including Apple, Microsoft, Amazon, and Tesla. These companies are market leaders in technology, finance, healthcare, and other key sectors, making the index a reflection of the broader U.S. economy.

By investing in the S&P 500, investors gain diversification across multiple industries, reducing risk compared to investing in individual stocks. Since the index represents about 80% of the total U.S. market capitalization, it offers a broad and balanced market exposure.

Strong Long-Term Performance and Market Resilience

Historically, the S&P 500 has delivered consistent long-term growth, despite short-term market fluctuations. The index has demonstrated resilience during economic downturns, recovering from crises such as the 2008 financial crisis and the 2020 COVID-19 market crash.

While year-to-year returns may vary, the S&P 500 has averaged an annual return of around 10% over the long term, making it an attractive option for wealth-building and retirement planning. Investors who adopt a long-term strategy with the index benefit from compounding returns and economic growth.

Low-Cost and Passive Investing

Investing in the S&P 500 can be done through low-cost funds and ETFs (exchange-traded funds). These investment vehicles track the performance of the index, allowing investors to gain exposure to all 500 stocks without needing to pick individual companies.

Unlikely actively managed funds, index ETFs focus on passive replication, making them more cost-effective due to lower fees. They also trade throughout the day just like stocks, providing liquidity and flexibility.

Simple & Hassle-Free Investment

Unlike stock picking, which requires in-depth research and analysis, investing in the S&P 500 allows investors to own a piece of every company in the index without the need for active management. This makes it an ideal choice for those who prefer a set-it-and-forget-it investment strategy.

Additionally, S&P 500 ETFs and index funds are liquid and trade with tight bid-ask spreads, making them suitable as core holdings in an investment portfolio. Whether for retirement savings, long-term wealth building, or passive investing, the S&P 500 remains a go-to choice for investors worldwide.

Over the decade spanning 2015 to 2024, the S&P 500 exhibited notable performance, reflecting its resilience and growth potential.

Annual returns (2015-2024)

These figures highlight the variability inherent in annual stock market returns, with most years yielding substantial gains and occasional periods of decline.

An investment of RM 10,000 in the S&P 500 at the beginning of 2015, with dividends reinvested, would have grown to approximately RM 35,461 by the end of 2025. This represents a total return on investment of 254.61%, equating to an annualized return of 13.38% over the 10-year period.

In contrast, the compound annual growth rate (CAGR) for the FTSE Bursa Malaysia KLCI (FBM KLCI) from 2015 is approximately -0.70% over the last 10 years. This indicates that, on average, the index declined by about 0.70% annually over this period, reflecting relatively weak long-term growth compared to the S&P 500.

S&P 500 10-year return

Source: S&P Global

KLCI 10-year return

Source: Investing.com

The comparison between the S&P 500 and the FBM KLCI over the past decade reflects differing market trends. The S&P 500 has demonstrated strong growth, driven by the performance of major technology and consumer companies, while the FBM KLCI has experienced fluctuations with a more modest overall trend. This contrast highlights the varying economic landscapes and sector compositions of the two markets.

Invest in S&P 500 for diversification

The S&P 500 is one of the most well-diversified stock indices, covering approximately 80% of the U.S. equity market. This broad representation allows investors to gain exposure to multiple industries without concentrating risk in any single sector.

As of early 2025, the index is weighted toward Information Technology, which accounts for around 30.0% of its composition. This reflects the dominance of tech giants such as Apple, Microsoft and Nvidia in driving market growth. Other significant sectors include Financials, Health Care, and Consumer Discretionary, ensuring a well-balanced mix of cyclical and defensive industries.

The sectoral diversification acts as a natural hedge against market volatility. If one industry underperforms such as financials struggling with high interest rates— strong performance in sectors like technology or healthcare can balance the overall returns. Additionally, the index regularly rebalances, adapting to emerging trends such as AI, renewable energy, and semiconductor advancements, while eliminating underperforming companies.

Over the long term, this well-structured diversification has contributed to the S&P 500’s consistent returns, making it a reliable option for investors seeking stable growth with reduced exposure to sector-specific downturns. Investing in S&P 500 not only mitigates risks but also ensures participation in the overall expansion of the U.S. economy.

Source: https://www.spglobal.com/spdji/en/indices/equity/sp-500/#data 

Two main ways to invest in the S&P 500 from Malaysia

Malaysian investors have multiple avenues to gain exposure to the S&P 500, the two most common ways are through Exchange-Traded Funds (ETFs) and Unit Trusts / Mutual Funds. Each option offers distinct advantages and should be considered based on an investor’s preferences for cost, accessibility, and trading flexibility.

S&P 500 ETFs vs unit trusts in Malaysia

ETFs and Unit Trusts offer ways to invest in the S&P 500, but they differ significantly in structure, cost, and accessibility. ETFs are typically low-cost, highly liquid, and trade like stocks, making them a preferred choice for hands-on investors. On the other hand, Unit Trusts generally come with higher fees and are more accessible through local banks and investment platforms.

The table below highlights key differences between these two investment vehicles:

List of popular S&P 500 funds you can invest in

The S&P 500 is one of the most widely tracked indices, and investors have several options when it comes to investing in funds that mirror its performance. ETFs offer a low-cost and efficient way to gain exposure to the S&P 500, with some of the largest funds managing hundreds of billions in assets. A list of popular S&P 500 ETFs is tabulated below.

* as of 28th Mar 2025

Where to invest in these S&P 500 funds

Malaysian investors have multiple options to invest in S&P 500 funds, ranging from local platforms to international brokerage accounts. When deciding between options, factors to consider include platform fees, minimum investment requirements, access to different fund types (ETFs or unit trusts), and tax efficiency.

How to start investing in the S&P 500 from Malaysia (step-by-step)

One of the easiest ways to get started is through StashAway, a robo-advisor platform that provides automated, globally diversified investment portfolios. StashAway allows Malaysian investors to gain exposure to the S&P 500 without the need to open a foreign brokerage account or manually manage their investments. With a low starting capital and automatic rebalancing, it’s an accessible option for both beginners and experienced investors looking for a hands-off approach.

You can’t invest in the S&P 500 index itself—it’s just a list of 500 companies. StashAway’s Flexible Portfolios allows you to invest directly in a single S&P 500 ETF such as the iShares Core S&P 500 ETF (IVV US). With low management fees (starting at 0.3% p.a.), Flexible Portfolios on StashAway allow investors to tailor their investments while keeping costs efficient.

Below is a step-by-step guide on how to start investing in the S&P 500 using StashAway.

1. Sign Up for a StashAway Account

• Download the StashAway app or visit the website.
• Register with your email and set up your profile.

2. Complete the Verification Process

• Submit identification documents (IC / passport) for verification.
• Link your bank account for fund transfers.

3. Select “Flexible Portoflios”

• Navigate to the “Flexible Portfolios” option.
• Choose iShares Core S&P 500 ETF (IVV US) as your primary investment.

4. Create and Customize Your Flexible Portfolio

• Choose whether to build a portfolio from scratch or modify a core, globally diversified template portfolio.
• Select from over 55 asset classes and adjust allocations to fit your strategy.

5. Decide on Your Investment Amount

• Invest any amount—there’s no minimum deposit or lock-in period.

6. Review and Confirm Your Investment

• Check your selected portfolio allocation and expected fees.
• Confirm your investment and proceed with funding.

7. Transfer Funds to Your StashAway Account

• Deposit funds via online banking or FPX transfer.
• The investment will be executed once the funds are received.

8. Monitor and Adjust Your Portfolio anytime

• Track your portfolio performance through the app.
• Modify asset classes and allocations whenever needed to align with your financial goals.

By following these steps, you can easily start investing in the S&P 500 through ETFs in Malaysia while enjoying low fees, diversification, and long-term growth potential.

Differences between each of the S&P 500 ETFs

When choosing an S&P 500 ETF, investors should consider factors like expense ratios, liquidity, dividend handling, and tracking error. While all S&P 500 ETFs aim to replicate the index’s performance, subtle differences in structure and fees can impact returns over time. The table below compares three of the most popular S&P 500 ETFs: SPY, VOO, and IVV.

Things to consider before investing

Investing in the S&P 500 is a great way to gain exposure to top US companies and diversify your portfolio. However, as a Malaysian investor, there are additional factors beyond just selecting the right fund. While the S&P 500 itself is a strong long-term investment, elements such as currency risk, foreign exchange (forex) conversion fees, and withholding taxes can significantly affect your returns.

Currency risk

Since S&P 500 funds are denominated in foreign currencies, primarily USD, Malaysian investors are exposed to foreign exchange (forex) risk. If the Malaysian Ringgit (MYR) weakens against the USD, your investment value in MYR will increase when converted back. This means that even if the S&P 500 fund does not gain much, a weaker MYR could still result in positive returns when you eventually sell and convert back to local currency.

However, the opposite is also true — if MYR strengthens, your returns could be eroded when converting back from USD to MYR. This adds an additional layer of risk, especially for long-term investors. While it’s impossible to predict currency movements, one way to manage the risk is by investing consistently over time (dollar-cost average) rather than making a single lump-sum investment.

Conversion fees

Investing in foreign markets often requires currency conversion, and different platforms charge different fees for this service. Many brokers and banks impose a spread fee on currency exchange, which typically ranges from 0.3% to 1.5% per transaction. Over time, these small fees can significantly eat into your returns, especially if you frequently deposit or withdraw funds.

Some platforms offer more competitive exchange rates compared to local banks. Meanwhile, Malaysian banks or traditional brokerage firms may charge higher spreads, making them less cost-effective for frequent investors. Before selecting a platform, it’s essential to compare their forex rates and fees to minimize unnecessary costs.

Withholding tax

When investing in US-listed ETFs, dividends paid by the fund are subject to a 30% withholding tax imposed by the US government. This means that if an ETF declares a 4% dividend yield, Malaysian investors will only receive 2.8% after tax deductions. This tax is deducted at the source before dividends are distributed, reducing your overall returns from dividend-paying ETFs.

A more tax-efficient alternative is to invest in UCITS ETFs domiciled in Ireland, such as CSPX (iShares S&P 500 UCITS ETF) or VUSD (Vanguard S&P 500 UCITS ETF). These ETFs benefit from a tax treaty between Ireland and the US, which reduces the withholding tax on dividends from 30% to 15%. While this doesn’t eliminate the tax completely, it does improve after-tax returns for dividend investors.

Before investing in an S&P 500 fund, it’s crucial to consider these factors as they can significantly affect your net returns. While currency fluctuations are beyond your control, choosing platforms with lower forex fees and tax-efficient fund structures can help you reduce costs and optimize your investments. Understanding these elements ensures that your long-term strategy is aligned with your financial goals, allowing you to make informed decisions when investing in the S&P 500 from Malaysia.

FAQs about investing in the S&P 500 from Malaysia

1. Can Malaysians invest directly in the S&P 500?

Not directly into the index, but yes — Malaysians can invest in S&P 500 ETFs or unit trust/index funds that track the S&P 500 via local or international brokers.

2. What is the minimum amount needed to invest in the S&P 500?

It depends on the platform. Some robo-advisors and international brokers allow you to start with as little as USD $1 (e.g., using fractional shares), while some unit trusts may require a minimum of RM100 to RM1,000.

3. Is it better to invest in the S&P 500 through an ETF or a unit trust?

ETFs generally have lower fees and more flexibility, but unit trusts might be more accessible via local banks or PRS/SRS accounts. Your choice depends on your investment goals and platform preference.

4. Do I need a foreign trading account to buy S&P 500 ETFs?

Yes, if you're buying U.S.-listed ETFs like SPY or VOO. But some locally listed S&P 500 ETFs (e.g., on SGX or HKEX) can be bought using regional brokerage accounts like FSMOne or Moomoo MY.

5. Are S&P 500 ETFs safe for long-term investment?

S&P 500 ETFs are considered relatively low-risk equity investments because they track a diversified index of top U.S. companies. However, they still carry market risk, so long-term holding is generally recommended.

6. Is there any dividend payout from S&P 500 ETFs?

Yes. Many S&P 500 ETFs distribute dividends quarterly based on the dividends paid by the underlying companies. Some ETFs also offer accumulating versions that reinvest dividends automatically.

7. Do I need to pay tax on my S&P 500 returns as a Malaysian?

Malaysia does not impose capital gains tax on overseas investments. However, withholding tax may apply on U.S. dividends (typically 30% unless reduced under tax treaties).

Think beyond borders for long-term growth

Investing in the S&P 500 isn’t just about chasing higher returns — it’s about shifting your perspective. For Malaysians who’ve traditionally focused on local investments, gaining exposure to the U.S. market offers a chance to diversify, hedge against domestic risks, and participate in global innovation.

While short-term volatility is inevitable, the long-term trajectory of the S&P 500 has been shaped by world-leading companies, evolving technologies, and a resilient economy. It’s not a magic bullet, but it’s a proven vehicle for patient, disciplined investors.

The key is to start — even with small, regular contributions — and let compounding do the heavy lifting. With the right tools and a long-term mindset, investing in the S&P 500 can be a powerful step toward building sustainable, borderless wealth.