The SPDR S&P 500 ETF Trust is among the most popular exchange-traded funds (ETFs). It aims to track the Standard & Poor's (S&P) 500 Index, which comprises 500 large-cap U.S. stocks. These stocks are selected by a committee based on market size, liquidity, and industry.
SPX and SPY: What's the difference? SPY is the stock code of exchange traded funds that track the performance of the S&P 500 index; It trades like a stock. SPX is only a value representing the level of the Standard & Poor's 500 Index and cannot be traded directly.
Composition of ETFs
They are hybrid in that they combine mutual funds and the intraday trading features of closed-end funds. Nevertheless, ETFs can only be purchased and shared by retail investors in market transactions, rather than directly selling individual shares.
Unlike a single stock representing one company, an ETF consists of a collection of securities. These may include stocks, bonds, commodities, or other instruments, providing investors with a convenient way to achieve diversification.
The order of the 11 sectors based on size is as follows: Information Technology, Health Care, Financials, Consumer Discretionary, Communication Services, Industrials, Consumer Staples, Energy, Utilities, Real Estate, and Materials.
SPY has an expense ratio of 0.09%, which, while low, is still higher than that of VOO,'s 0.03%, one of the lowest expense ratios for S&P 500 ETFs. This makes VOO more cost-effective for long-term investors, as expense ratio differences compound over time and impact returns.
Generally speaking, SPY options are more actively traded, so they tend to have greater market liquidity and smaller differences between the bid and ask prices (aka “bid-ask spread”). SPX shares are still very liquid, but prepare for wider bid-ask spreads.
In the past year, QQQ returned a total of 25.74%, which is slightly higher than SPY's 24.07% return. Over the past 10 years, QQQ has had annualized average returns of 18.26% , compared to 12.97% for SPY. These numbers are adjusted for stock splits and include dividends.
Index Top Holdings as of Jan 10 2025
Apple Inc. Amazon.com Inc. Tesla Inc. Broadcom Inc.
Low costs: ETFs like SPY tend to have lower expense ratios (i.e., the annual fee that the fund charges to manage its assets) than actively managed mutual funds. This can make them a cost-effective choice for investors.
The frequency of index rebalancing depends on the index in question. Some indexes, like the S&P 500, are rebalanced quarterly, while others are adjusted semiannually or annually. 4 Specialized or thematic indexes might have unique rebalancing schedules.
SPY Dividend Information
SPY has a dividend yield of 1.22% and paid $7.07 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Dec 20, 2024.
The SPY comes with an 0.09% expense ratio, which is the ETF equivalent of fund management fees. An investor who invests $100,000 into the SPY ETF must pay $90 as management fees.
SPY options do no benefit from the 60/40 tax rule and are therefore subject to traditional capital gains taxes and holding times for short-term vs. long-term gains.
The SPY is a singular trading vehicle, instead of scanning 100-200 stocks to find movers, the SPY usually has some really good moves daily. The SPY options have 3 expiration a week, meaning you have more choice and liquidity. The SPY options on a shorter term basis are cheap (can find options under $1.00 or $100)
Invesco QQQ ETF (QQQ) is an exchange-traded fund that tracks the Nasdaq-100 Index™. The index includes the 100 largest non-financial companies listed on the Nasdaq, based on market cap. You can access the performance of these 100 companies with an investment in QQQ.
Berkshire Hathaway owns two exchange-traded funds (ETF), The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) and the Vanguard S&P 500 ETF (NYSEMKT: VOO). Both of these ETFs track the S&P 500.
For example, you might buy SPY if you want to trade actively, or even venture into day trading, because of its high volume. You might consider buying VOO to hold over the long term because of its lower expenses.
The Vanguard S&P 500 ETF has had a total return of 257% over the past decade. Another huge benefit of this particular ETF is that it has a very low expense-ratio fee of just 0.03%. That means if you invest $1,000, you'll pay just $0.30 in fees, and $10,000 invested in the fund will cost you only $3.
Who owns SPY? SPY is owned by its investors — the shareholders of the fund. When you buy shares of SPY, you become an owner of the fund and are entitled to a share of the fund's assets and earnings.