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The SPDR S&P 500 ETF trust, listed on the New York Stock Exchange as SPY, is a popular exchange-traded fund (ETF) that tracks the performance of the S&P 500 index. SPY is the first ETF listed in the US, debuting in 1993. The fund offers investors exposure to approximately 500 of the largest companies in the US.
Here you can read more about how the SPY ETF works and how you can invest in it.
How does the SPY ETF work?
The SPY ETF is an index fund that aims to track the performance of the S&P 500 index, a stock index of approximately 500 of the largest publicly traded companies in the US. SPY has a diversified portfolio of securities closely aligned with key risk factors. and features of the full index.
SPY was originally launched in 1993 and is managed by State Street Global Advisors. As of early 2024, it has $481.4 billion in assets under management and is the most actively traded ETF globally.
The price of one share of SPY is designed to be one-tenth the value of the S&P 500 Index. The ETF has generated an average annual return of more than 9 percent since its inception.
In which sectors is the SPY ETF invested?
The top five sectors in SPY are information technology, healthcare, financial services, consumer discretionary and communications services.
Source: State Street Global Advisors
What are SPY’s assets?
The tables below compare SPY with the investments of the S&P Index. As you can see, in most cases the percentages correspond closely.
Source: State Street Global Advisors
What are the benefits of the SPY ETF?
Many investors turn to index funds for diversification, tax efficiency, low costs and minimal maintenance. SPY offers exposure to more than 500 of the largest stocks in the US, all in one fund, which can be much easier than investing in the shares of many individual companies.
What are the risks of the SPY ETF?
While SPY is a cost-effective and highly liquid investment option for investors, it is also subject to the same risks as any other stock market investment, including market volatility and economic and geopolitical risks. The value of equity securities may fluctuate and decline significantly due to the actions of individual companies and general market and economic conditions.
How to invest in the SPY ETF
Investors can buy and sell shares of SPY or other ETFs or stocks using a brokerage account or a self-directed investment account, such as an IRA. Investors who work with a broker or financial advisor can have their money invested in SPY.
In short
The SPY ETF is a cost-effective investment option for investors looking to gain exposure to approximately 500 major U.S. companies. However, it is also subject to the same risks as any other stock market investment, including market volatility and economic and geopolitical risks. That said, for investors looking to diversify their portfolios, the SPY ETF is a solid option.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making any investment decision. In addition, investors are advised that the past performance of investment products does not guarantee future price increases.
