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Should SPDR S&P 500 ETF (SPY) Be on Your Investing Radar?
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Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the SPDR S&P 500 ETF (SPY - Free Report) is a passively managed exchange traded fund launched on 01/29/1993.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $413.17 billion, making it the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.31%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 29.20% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Microsoft Corporation (MSFT - Free Report) accounts for about 6.32% of total assets, followed by Apple Inc. (AAPL - Free Report) and Amazon.com Inc. (AMZN - Free Report) .
The top 10 holdings account for about 29.08% of total assets under management.
Performance and Risk
SPY seeks to match the performance of the S&P 500 Index before fees and expenses. The S&P 500 Index is composed of five hundred selected stocks, all of which are listed on national stock exchanges and span over 25 separate industry groups.
The ETF has lost about -8.32% so far this year and it's up approximately 15.47% in the last one year (as of 01/24/2022). In the past 52-week period, it has traded between $370.07 and $477.71.
The ETF has a beta of 1 and standard deviation of 21.84% for the trailing three-year period, making it a medium risk choice in the space. With about 506 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPY is an excellent option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard S&P 500 ETF (VOO - Free Report) and the iShares Core S&P 500 ETF (IVV - Free Report) track the same index. While Vanguard S&P 500 ETF has $258.31 billion in assets, iShares Core S&P 500 ETF has $307.03 billion. VOO has an expense ratio of 0.03% and IVV charges 0.03%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should SPDR S&P 500 ETF (SPY) Be on Your Investing Radar?
Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the SPDR S&P 500 ETF (SPY - Free Report) is a passively managed exchange traded fund launched on 01/29/1993.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $413.17 billion, making it the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.31%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 29.20% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Microsoft Corporation (MSFT - Free Report) accounts for about 6.32% of total assets, followed by Apple Inc. (AAPL - Free Report) and Amazon.com Inc. (AMZN - Free Report) .
The top 10 holdings account for about 29.08% of total assets under management.
Performance and Risk
SPY seeks to match the performance of the S&P 500 Index before fees and expenses. The S&P 500 Index is composed of five hundred selected stocks, all of which are listed on national stock exchanges and span over 25 separate industry groups.
The ETF has lost about -8.32% so far this year and it's up approximately 15.47% in the last one year (as of 01/24/2022). In the past 52-week period, it has traded between $370.07 and $477.71.
The ETF has a beta of 1 and standard deviation of 21.84% for the trailing three-year period, making it a medium risk choice in the space. With about 506 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPY is an excellent option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard S&P 500 ETF (VOO - Free Report) and the iShares Core S&P 500 ETF (IVV - Free Report) track the same index. While Vanguard S&P 500 ETF has $258.31 billion in assets, iShares Core S&P 500 ETF has $307.03 billion. VOO has an expense ratio of 0.03% and IVV charges 0.03%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.