The SPDR S&P 500 ETF Trust (SPY) is one of the most widely traded ETFs in the world. It tracks the S&P 500 Index, providing diversified exposure to the 500 largest publicly traded companies in the United States.
However, for long-term Indian investors, SPY carries a critical structural risk: The US Estate Tax. If you hold US-domiciled assets (like SPY) and your portfolio value exceeds $60,000, the US government levies a 40% Estate Tax on the excess amount upon your death. This creates an unnecessary risk that can wipe out nearly half of the wealth intended for your heirs.
This blog gives you all the information you need about the top UCITS alternatives. These alternatives have similar underlying assets and track the same index, providing the same growth and exposure without the risk of the US Estate Tax.
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Why Indians are looking for UCITS alternatives to SPY
Indian investors are shifting to UCITS alternatives because they solve the tax risks and inefficiencies of US ETFs like SPY while providing the exact same exposure.
- Estate Tax Protection: UCITS funds are typically domiciled in Ireland. They are not considered "US-situs" assets, meaning they are 100% exempt from the 40% US Estate Tax.
- Tax Deferral (Accumulation): Unlike SPY, which forces taxable cash dividends on you, many UCITS funds offer "Accumulating" classes that reinvest dividends automatically. This reduces your tax liability in India and defers it until you sell the fund.
To learn more about UCITS ETFs and why Indian investors are choosing them, read our guide on UCITS ETFs.
Popular UCITS Alternatives for SPY
Here are the top three UCITS funds that track the S&P 500.
1. Vanguard S&P 500 UCITS ETF
This is the European "twin" of SPY, managed by Vanguard. It holds the exact same underlying assets, the top 500 US companies.
It is the most liquid option in Europe, making it ideal for traders who need tight spreads or investors who prefer receiving cash dividends.
- Ticker: VUSA (LSE)
- Total Expense Ratio (TER): 0.07%
- Structure: Distributing
- Top Holdings: NVIDIA, Apple, Microsoft, Amazon, Alphabet.
2. iShares Core S&P 500 UCITS ETF
For long-term Indian investors, this fund is often superior to VUSA due to its Accumulating (Acc) structure.
Instead of paying out dividends (which would be taxed at your income slab in India), the fund uses that cash to buy more shares internally. This creates a compounding effect that significantly boosts net returns over a 10-20 year horizon.
- Ticker: CSPX (LSE)
- Total Expense Ratio (TER): 0.07%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: NVIDIA, Apple, Microsoft, Amazon, Alphabet.
3. Invesco S&P 500 UCITS ETF
With an expense ratio of just 0.05%, it is significantly cheaper than both SPY (0.09% + tax drag) and VUSA (0.07%).
While it tracks the same index, the lower fee drags less on performance over time. For passive "buy-and-hold" portfolios where every basis point counts, SPXS is often the optimal choice.
- Ticker: SPXS (LSE)
- Total Expense Ratio (TER): 0.05%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Synthetic Swap (Tracks S&P 500 Index perfectly).
Invest in UCITS ETFs with Paasa
Paasa is a global investing platform designed for Indian investors. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore.
This means you are not restricted to just US ETFs like the QQQ; you can also buy tax-efficient UCITS equivalents using Paasa.
The Compliance Advantage
Paasa makes global investing easy and also removes the compliance friction with a specialized layer built specifically for Indian residents:
- Schedule FA Reporting: Exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- Tax Filing & Advice: Access to expert tax advice and seamless filing support.
- FEMA & LRS Integration: Guidance on FEMA regulations and LRS limits to ensure compliance.
Paasa also provides access to managed strategies, along with remittance, FEMA and tax advisory.
Disclaimer
This article is intended for information only and does not constitute investment or tax advice. Investing in global markets entails risks, including currency risk, political risk, and market volatility. Please seek advice from qualified financial and tax professionals before acting.
