Investing £750 in the S&P 500 a year ago would be worth this much now

Jon Smith explains why an investment in the S&P 500 last year would have beaten the FTSE 100, but cites active stock picking as the way forward.

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The S&P 500‘s started 2025 where it left 2024, moving higher! Fresh record highs in January mean that some investors think the rally from the past two years might have legs to keep going. If an investor had this thought at the same time last year and had put £750 in a tracker fund, here’s what it would be worth today.

Checking out the gains

The S&P 500’s currently at 6,052 points. This time last year, it was at 4,905 points. This marks an impressive 23.4% gain over the 52-week stretch. This means that the £750 would be worth £925.50. I should note that this is the unrealised gain as we stand. If an investor owned the tracker fund, they would only realise the proceeds if it was sold.

At first glance, this is a large percentage gain. Not only is it a positive return, but it’s also sizeable! But the real question comes as how this stacks up against other options that would have been considered for the investor in January 2024?

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They could have gone closer to home and picked a tracker fund on the FTSE 100. In that case, the investor would be up 12.9% instead. So putting money in the US stock market instead would clearly have been a better move.

Active versus passive

Yet in terms of active stock picking versus a passive tracker, there are some differences. If they had picked a member of the ‘Magnificent 7’, the return could be much larger. For example, Nvidia’s stock’s risen 88% over the same time period. Tesla‘s has doubled!

Of course, I have to be careful when making these comparisons. Even though these are popular stocks, it’s equally possible that the investor could have bought another company that lost money.

Looking ahead

It’s true that a S&P 500 tracker could perform well this year again. But I believe investors could find more value in being selective instead. For example, they could consider adding American Express (NYSE:AXP). The charge card and financial services provider has experienced a 57% jump in the share price over the past year.

Created with Highcharts 11.4.3American Express PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I think the business could do well this year, with the latest quarterly results out earlier this month showing a 12% jump in net income versus the same period last year. Revenue’s rising, fuelled by “our premium customer base, particularly with Millennial and Gen Z consumers”.

Remember too that even if interest rates fall, the business isn’t as impacted as banks. This is becuase it earns a significant portion of its revenue from card fees and lending rather than just deposits.

However, one risk is that if we see a US recession or general economic lull, it could hit American Express. A slowdown in consumer spending would cause transaction volumes to fall.

Ultimately, I feel stocks like American Express could be considered as part of a diversified portfolio rather than just a passive tracker.

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

American Express is an advertising partner of Motley Fool Money. Jon Smith owns shares in Tesla. The Motley Fool UK has recommended Nvidia and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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