Is an S&P 500 ETF a Safe Investment During a Market Crash?
2026-07-23 19:36
•Maurie Backman •The Motley Fool
• • Axe Capital view
S&P 500 ETFs: Tough Through Turbulence?
S&P 500 ETFs dip in crashes but may still suit patient investors with a local currency lens.
An S&P 500 ETF, like VOO, is no magic shield against market crashes—they’ll fall when the US market tank. But their strength lies in broad exposure to 500 large companies, which historically bounce back over time. For South African investors, the real question is how the rand moves against the dollar during these shocks. A weaker rand can soften the blow by boosting returns in local currency terms, but if the rand holds firm or strengthens, local losses mirror those in the US. This means your patience pays off only if you resist the urge to panic-sell. The same dynamic doesn’t play out cleanly in local stocks, many of which are more tied to commodity cycles or local economic conditions. So, treat the ETF as a long-term US equity play, add a rand hedge if you must, but don’t expect it to smooth out every bump. This view falters if the rand unexpectedly rallies or if the US market stays depressed for a prolonged period. this is just my opinion and not financial advice
I’d buy S&P 500 ETFs for a multi-year horizon while monitoring USD/ZAR. If the rand weakens sharply, I’d trim some holdings, locking in rand gains. Avoid short-term trading on these ETFs.
- VOO
- USD/ZAR
- prolonged US market downturn
- unexpected rand strength
6/10
S&P 500 ETFs can lose value during market crashes, but they remain suitable long-term investments for investors with years until retirement. The funds offer broad diversification across 500 large U.S. companies and historically recover from downturns. Success depends on an investor's ability to hold through volatility rather than panic-selling.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Maurie Backman
Categories: Equities
Tickers: VOO
Sentiment: Positive - Referenced in the 'Read Next' section as a viable investment option, implying it is considered a legitimate choice for investors despite market volatility concerns.
Keywords: S&P 500 ETF, market crash, diversification, long-term investing, portfolio risk, market recovery, retirement planning
Insights:
- VOO: Positive: Referenced in the 'Read Next' section as a viable investment option, implying it is considered a legitimate choice for investors despite market volatility concerns.