Like me, many may wonder about the benefits of seeing beyond reality FTSE100 to international indexes such as S&P500.

Both companies include blue-chip companies with attractive growth prospects. However, for a cross-border investor, comparing apples to apples can be arduous. Here’s why I currently prefer the UK index to its larger US counterpart.

Concentration

Let’s start with the size. The S&P 500 is huge, with a market capitalization currently around $42 trillion (£32 trillion). For comparison, Footsie boasts a market capitalization of £2 trillion. Despite this greater depth and breadth, I like the smaller (but powerful) UK index for its diversification.

‘Magnificent 7’ Stocks in the S&P 500 Index – Apple, Amazon, Google, Meta, Microsoft, NvidiaAND Tesla — include over one third of the US index. This means that gigantic fluctuations in individual companies can change the entire market.

In turn, the four largest Footsie components constitute 26.9% of the index, and the largest, AstraZenecawhich is 8.5%.

Economic background

The second piece of the puzzle for me is the economy and the macroeconomic environment. Britain has a newly elected government that could make changes based on a landslide victory.

Inflation fell to 2.2%, almost to the 2% target, and interest rates began to fall.

In the US it is a different picture. Geopolitical risks remain elevated, and some say the Fed is overdue in cutting interest rates.

Combine that with a hotly contested election and divergent political views, and I think I’m more confident in the UK.

Valuations

Strong stock price growth, driven by companies like Nvidia, has caused the S&P 500’s price-to-earnings (P/E) ratio to skyrocket. In fact, the U.S. index currently has a P/E of around 27.

Given that Footsie boasts a P/E ratio of 15.3, I believe it is worth getting better value in the next cycle. Of course, no investor will complain about the sturdy price escalate that has pushed US valuations up.

What about income? The FTSE 100 dividend yield is currently 3.5% compared to 1.3% for the S&P 500.

Comparing companies across borders is arduous. Taxes, capital structure, investor base and overall goals vary.

It said Tesco (LSE: TSCO) is one stock that caught my eye. Shares in the British food giant are up 21.6% this year and are trading at 356.5p at the time of writing.

I like the growth path for the consumer staples company, especially if consumers start tightening their belts. In terms of valuation, the company has a dividend yield of 3.5% and a P/E ratio of 19.

There is no doubt that the supermarket industry is a demanding one, characterized by low margins, fierce competition and complicated supply chain and cost management.

However, I think I could utilize potential value stocks like Tesco in my portfolio before looking further abroad towards the S&P 500.

Key takeaway

Both the US and UK have great stock indexes with top companies. Given the challenges of cross-border investing and my wish list for Footsie shares when I get the cash, I think I’ll invest in the UK for now.