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- Hong Kong investors can access S&P 500 exposure and broader US equity through four funds on Endowus, each differing in benchmark, replication method, and cost — with the HKD-USD currency peg reducing exchange rate risk that most non-US investors face.
- The 30% US dividend withholding tax applies to all retail-accessible US equity funds on Endowus Hong Kong — adding up to 0.45 percentage points per year in cost on top of each fund's TER, a factor that outweighs small differences in headline fees.
- A standalone US equity fund excludes non-US markets, small-cap stocks, and bonds. The Endowus Flagship Portfolio addresses all three gaps and can be used alongside a US equity fund as a core-and-satellite strategy.
The S&P 500 delivered a price return of approximately 17.9% in 2025, its third consecutive year of double-digit gains — and has more than quadrupled over the past decade. For Hong Kong investors, that kind of sustained performance naturally raises a question: how do I get a piece of it, and what's the most cost-effective way to do so?
This article explains what the S&P 500 is, how index funds and unit trusts track it, and what makes the cost calculation different for Hong Kong investors — including the impact of US dividend withholding tax.
We also compare the S&P 500 tracker alongside three other US equity funds available on the platform, and examine how any standalone US allocation fits within a well-constructed, long-term portfolio.
Why do Hong Kong investors buy into the S&P 500 or leading US stocks?
Hong Kong investors tend to allocate to the S&P 500 for several reasons. First, currency risk is lower than for most other non-US investors due to a peg that has been put in place since 1983. This means negligible exchange rate uncertainty unlike yen or the euro face when accessing US markets.
Second, the S&P 500 offers exposure to the world's largest equity market, covering approximately US$70 trillion in combined market value (as of June 2026) in a single concentration. Its constituents include Apple, Amazon, Alphabet (Google), Microsoft, Meta, and Tesla — companies that are globally familiar but structurally dominant in ways that Hong Kong's domestic market cannot replicate.
Third, the index is market-capitalisation-weighted, meaning the largest and most actively traded companies carry the highest representation. This self-rebalancing mechanism keeps the index anchored to the market's most economically significant businesses without requiring active management decisions.
What is the difference between the S&P 500 index and an S&P 500 fund?
The S&P 500 itself is a benchmark — a rules-based measure of market performance that reflects the investable universe, rather than a product investors can buy directly. Instead, investors allocate to an S&P 500 fund that replicates it by holding, or synthetically replicating, the same stocks in roughly the same proportions as the index, and returns move in line with the benchmark.
S&P 500 funds come in two main structures:
- An exchange-traded fund (ETF), listed on a stock exchange and trading intraday like a stock. Examples include SPY, IVV, and VOO, which are US-listed and among the most traded securities in the world.
- A unit trust (or mutual fund), priced once daily at net asset value, and bought and sold directly through a platform rather than on an exchange.
For Hong Kong investors, US-listed ETFs carry a 30% US dividend withholding tax on distributions, as well as a US estate tax on estates exceeding US$60,000 in US-listed securities. A unit trust tracking the S&P 500 or other US equity can avoid the latter, but not the former.
Which US equity funds are available to Hong Kong investors on Endowus?
For retail investors seeking S&P 500 exposure in Hong Kong, Endowus offers the HSBC ICAV US Equity Index Fund, which tracks the S&P 500 directly.
Investors seeking broader US exposure have additional options. The iShares World Equity Index Fund provides global equity coverage, with the US as its largest single-country allocation (over 60% of the portfolio). The T. Rowe Price Funds SICAV – US Large Cap Growth Fund and the Franklin U.S. Opportunities Fund offer actively managed US equity exposure, benchmarked to the Russell 1000 Growth and Russell 3000 Growth indices respectively — T. Rowe Price targets growth-oriented large-cap US companies, while Franklin casts a wider net across the full US market, with stock selection in both driven by fund manager discretion rather than index replication.
Here is how the funds compare:
How do different benchmark replication methods affect investors?
Each one of these funds uses a different approach to gain US equity exposure — passive S&P 500 tracking, broad global index tracking, and active US equity stock selection. Investors should familiarise themselves with all of them before choosing which fund to allocate to.
These funds differ in cost, replication methodology, and risk profile. However, all four hold their underlying US equity securities directly — meaning the tax consequences discussed above apply.
At a US equity dividend yield of approximately 1.1% (as of June 2026), the 30% withholding tax amounts to roughly 0.32 percentage points per year in additional cost drag for funds with full US equity exposure (HSBC, T. Rowe Price, Franklin). For the iShares World Equity Index Fund, which allocates roughly 60% to the US, the effective drag is proportionally lower — approximately 0.20 percentage points per year^.
^The withholding tax drag figures above are illustrative estimates based on an assumed US equity dividend yield and a 30% US dividend withholding tax rate applicable to non-US investors. Actual tax treatment depends on individual circumstances and may vary. This does not constitute tax advice. Investors should seek independent tax advice where appropriate.
HSBC ICAV US Equity Index Fund
The HSBC ICAV US Equity Index Fund tracks the S&P 500 Net Total Return Index with a total expense ratio (TER) — the annual fee charged by a fund manager, which is deducted from the fund's returns before they reach investors — of 0.31% per annum, and is available to Hong Kong retail investors in HKD.
Managed by HSBC Asset Management, it uses physical replication as its primary method, meaning it invests directly in the actual constituent stocks of the S&P 500 while retaining the flexibility to use synthetic replication whenever it improves operational efficiency. Since its inception in October 2019, it has closely tracked the S&P 500 with low tracking error.
iShares World Equity Index Fund
The iShares World Equity Index Fund tracks the FTSE MPF All-World Index, providing investors with passive, low-cost exposure to large- and mid-cap equities listed on MPFA-approved exchanges across both developed and emerging markets. While the US represents more than 60% of the fund's weight, it nonetheless includes emerging market equities, giving a broader global coverage than a developed-markets-only alternative.
iShares is the index franchise of BlackRock, the world's largest asset manager with more than US$13.9 trillion in assets under management as of March 2026. It operates the world's largest ETF and index fund platform, with over 25 years of track record replicating more than 1,600 indices across equity and fixed income.
T. Rowe Price Funds SICAV - US Large Cap Growth Fund
The T. Rowe Price Funds SICAV – US Large Cap Growth Fund is an actively managed fund that invests in a diversified portfolio of large-capitalisation US companies with the potential for above-average and sustainable earnings growth. It benchmarks the Russell 1000 Growth Index, which covers the growth segment of the US large-cap market. Unlike an S&P 500 fund, it does not aim to replicate a broad market index — rather, the investment team exercises discretion in selecting individual stocks it believes can compound earnings at rates above the market average over the long term.
T. Rowe Price is a Baltimore-based global asset manager founded in 1937. The firm managed approximately US$1.83 trillion in assets under management as of April 2026, with a particular depth in actively managed equity strategies.
Franklin U.S. Opportunities Fund
The Franklin U.S. Opportunities Fund is an actively managed Luxembourg-domiciled investment fund that invests primarily in US equity securities. Managed by Franklin Equity Group, the fund targets companies across the growth spectrum — from high-growth disruptors to durable secular compounders — with the Russell 3000 Growth Index as its performance benchmark and the investment team holding positions across the full US market-cap spectrum.
Franklin Templeton is a US–based global investment organisation operating in over 150 countries. As of May 2026, the firm managed approximately US$1.78 trillion in assets under management across equity, fixed income, alternatives, and multi-asset strategies.
How do these S&P 500 or US equity funds compare to the Endowus Flagship Portfolio for Hong Kong investors?
US equity funds provide focused exposure to American companies, but mostly exclude non-US markets — a source of diversification that a globally constructed portfolio addresses. But deciding what asset to hold depends on what an investor is trying to achieve.
A pure US index fund like the HSBC ICAV US Equity Index Fund offers potentially clean, cost-effective exposure to US large-cap equities. Yet, it excludes the rest of the world: Europe, Japan, emerging markets, and the broader Asia-Pacific region that many Hong Kong investors already know well. It also leaves out small-cap companies, which have historically contributed to long-term equity returns.
Similarly, T. Rowe Price and Franklin focus on US growth equity stocks. They may outperform their respective index benchmarks in certain market environments, but their narrower mandates mean the same geographic and asset class concentration applies. The iShares World Equity Index Fund is broader — it covers developed and emerging markets globally — but remains a 100% equity fund, with the US still the dominant single-country allocation.
The Endowus Flagship Portfolio invests across tens of thousands of companies in global equity markets, spans multiple market capitalisations, and allows investors to include a fixed income exposure that can potentially offer further diversification.
For Hong Kong investors building long-term wealth, it provides geographic, sectoral, and asset-class diversification. These two approaches are not mutually exclusive. Many investors use the Flagship as their core global allocation while holding a US-focused fund for targeted US large-cap exposure.
Whether you are starting with an S&P 500 tracker or exploring a broader US equity fund, Endowus Fund Smart gives Hong Kong investors access to all four options on a single platform. Get started by opening an account with us.
Frequently asked questions: S&P 500 and US equity funds in Hong Kong
What is the S&P 500, and why is it relevant for Hong Kong investors?
The S&P 500 tracks the 500 largest US-listed companies, covering approximately US$70 trillion in combined market value as of mid-2026. For Hong Kong investors, the HKD-USD currency peg reduces — though does not eliminate — exchange rate risk when accessing US equity markets through S&P 500 funds.
How do I invest in the S&P 500 from Hong Kong?
Hong Kong investors can access the S&P 500 through US-listed ETFs such as SPY, IVV, or VOO via a brokerage account, or through unit trusts on platforms like Endowus Hong Kong. On Endowus, the HSBC ICAV US Equity Index Fund tracks the S&P 500 directly, accessible via HKD Cash.
Is the S&P 500 a good investment for Hong Kong investors?
The S&P 500 has delivered strong long-term returns and is structurally well-suited to Hong Kong investors, whose HKD-USD currency peg removes exchange rate risk on USD-denominated assets. As a 100% US large-cap equity allocation, it carries concentration risk — pairing it with a globally diversified portfolio addresses this.
Do Hong Kong investors pay US dividend withholding tax on S&P 500 funds?
Yes. All retail-accessible US equity funds on Endowus Hong Kong use physical replication or active management, meaning dividends from US holdings are subject to a 30% withholding tax before reinvestment.
Should I invest in an S&P 500 fund, a US equity fund, or the Endowus Flagship Portfolio?
They serve different purposes. An S&P 500 fund gives focused US large-cap exposure. The Endowus Flagship Portfolio provides global diversification across equities, bonds, geographies, and market capitalisation sizes. Most long-term investors benefit from using the Flagship as a core allocation and an S&P 500 and/or a US equity fund as a targeted complement.
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