It is pretty easy to get the S&P 500 return, but it always comes up in US Dollars (USD). What would have been the return of an EU investor? Would the EUR/USD exchange rate affect the final result?
S&P 500 average annual return (EUR)
As of this writing, the S&P 500 average annual return in Euros, since inception (July 1988), has been of +10.98%.
In this table, you will find the return of the S&P 500 Total Return Index (includes dividends), in EUR and with no currency hedging* (as of July 31st, 2024):
Period | Cumulative return (EUR) | Annualised average return (EUR) |
10 years | 325.12% | 15.58% |
20 years | 623.84% | 10.40% |
30 years | 1,863.18% | 10.04% |
All-time (since July 1988) | 4,349.05% | 10.98% |
Source: finance.yahoo.com; investing.com; ecb.europa.eu
*Currency hedging means that at the beginning of any analysis period, the investor converted EUR to USD and, at the end of the investment, it converted back the USD to EUR at the prevailing currency rate.
What does this mean?
Using the 10-year period as an example:
If a European invested €1,000 in the S&P 500 on July 31st, 2014, he/she should expect a final value of roughly €4,250.12 on July 31st, 2024.
The “roughly” comes from the fact that you could not have directly invested in the index. So, instead, you would have to invest in an ETF tracking the S&P 500, which, given its annual cost of about 0.10%, your actual return would have been slightly lower.
We assume that the investor did not engage in currency hedging to protect from the EUR/USD currency fluctuations. As such, the 23.56% appreciation of the USD during this period has been accounted for (it favoured the European investor).
Calculation methodology
First, we got data from Yahoo Finance on the S&P 500 Total Return (including dividends):
Secondly, we extract the USD/EUR exchange rates from the European Central Bank (ECB) website and Investing.com (for periods before 1999):
On July 31st, 2014, the USD/EUR exchange rate was 0.7474 (1 USD equals 0.7474 EUR). After 10 years (July 31st, 2024), the USD/EUR was 0.9235. This implies an appreciation of the USD relative to the EUR of 23.56%.
After that, we adjusted the beginning and end values of the S&P 500 Total Return Index for the USD/EUR exchange rates. So:
- S&P 500 Total Return Index value (July 31st, 2014): 3,503.19 USD * 0.7474 = 2,618.2842 EUR
- S&P 500 Total Return Index value (July 31st, 2024): 12052.09 USD * 0.9235 = 11,130.8531 EUR
Final result: [(11,130.8531/2,618.2842) – 1] * 100 = 325.12%
Bottom line
In this article, we have explored the S&P 500 returns from the perspective of an EU investor. We have manually calculated the S&P 500 in EUR by aggregating several reliable sources, such as the European Central Bank, Yahoo Finance, and Investing.com.
Did you find any inaccurate information? Please do let us know!