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The S&P 500 remains a primary benchmark for U.S. retirement investments, with approximately $20 trillion indexed or benchmarked to it as of late 2024. Historically, the index has provided long-term average annual returns of about 10%, with recent performance exceeding 25% in 2023 and 2024, and nearly 15% through mid-November 2025. These funds are widely utilized for their broad market exposure, though they are structured to track the index's specific inclusion criteria rather than capturing every new market entrant immediately.
Recent debate has emerged regarding the S&P 500 index committee's decision to maintain a 12-month waiting period and profitability requirements for new IPOs, specifically excluding the recent SpaceX IPO. While other benchmarks like the Nasdaq and Russell have updated rules to accommodate large-cap IPOs, the S&P 500's policy means investors in core funds like VOO, IVV, and SPY will not gain exposure to companies like SpaceX, OpenAI, or Anthropic until they meet these established criteria. This divergence has led to discussions regarding potential performance dispersions between the S&P 500 and other market indexes.
Approximately $20 trillion was indexed or benchmarked to the S&P 500 by the end of 2024.
The S&P 500 index committee requires a 12-month waiting period and profitability tests for new IPOs, excluding companies like SpaceX from current inclusion.
S&P 500 index funds have historically delivered average annual returns of about 10% over the long term.
The Vanguard and BlackRock S&P 500 ETFs manage nearly $2 trillion in combined assets.
Alternative benchmarks, such as the Nasdaq and Russell, have adopted more flexible inclusion rules for new mega-cap IPOs compared to the S&P 500.
The S&P 500 index committee maintains a 12-month waiting period for new IPOs and requires companies to meet specific profitability tests, which SpaceX has not yet satisfied.
The index has delivered approximately 10% average annual returns over the long term, with gains of over 25% in 2023 and 2024.
Investors may look to other market benchmarks like the Nasdaq 100 or Russell 1000, or utilize thematic ETFs that hold pre-IPO or direct stakes in specific companies.
Selection criteria typically focus on low expense ratios to minimize performance gaps and strong long-term average returns.
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