Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the SPDR S&P 500 ETF (
SPY Quick Quote SPY - Free Report) , 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 $385.29 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 find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile 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.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 1.52%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 26.80% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, Apple Inc. (
AAPL Quick Quote AAPL - Free Report) accounts for about 7.39% of total assets, followed by Microsoft Corporation ( MSFT Quick Quote MSFT - Free Report) and Amazon.com Inc. ( AMZN Quick Quote AMZN - Free Report) .
The top 10 holdings account for about 28.07% 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 -13.87% so far this year and is down about -9.69% in the last one year (as of 12/05/2022). In the past 52-week period, it has traded between $356.56 and $477.71.
The ETF has a beta of 1 and standard deviation of 24.80% for the trailing three-year period, making it a medium risk choice in the space. With about 505 holdings, it effectively diversifies company-specific risk.
SPDR S&P 500 ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SPY is a good option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard S&P 500 ETF (
VOO Quick Quote VOO - Free Report) and the iShares Core S&P 500 ETF ( IVV Quick Quote IVV - Free Report) track the same index. While Vanguard S&P 500 ETF has $279.17 billion in assets, iShares Core S&P 500 ETF has $311.42 billion. VOO has an expense ratio of 0.03% and IVV charges 0.03%. Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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.