The term spider is the commonly-used expression to describe the the Standard & Poor's Depository Receipt (SPDR). This type of investment vehicle is an exchange-traded fund (ETF). You can think of an ETF as a basket of securities (like a mutual fund) that trades like a stock. In the case of spiders, the basket of stocks is the S&P 500 index. One of the reasons for buying a SPDR is that it is a quick and easy way to have significant diversification. SPDRs are also relatively inexpensive compared to what it would cost to create this type of portfolio yourself.

SPDRs contain one-tenth of the S&P 500 index portfolio, which is why the cost to buy one unit of this asset is nearly equal to one-tenth of the S&P 500 index level. SPDRs trade on the American Stock Exchange (AMEX) under the symbol SPY. Like all ETFs, they trade in the same manner as regular stocks having continuous liquidity and provide regular dividend payments. This type of investment is ideal for those who believe in passive management, a strategy that attempts to mirror a market index with no desire to try and beat the market. See our Special Feature: Exchange-Traded Funds for everything you need to know about ETFs.

For more on index investing, check out Index Investing Tutorial, Introduction To Exchange-Traded Funds and Advantages Of Exchange-Traded Funds.

  1. Who's in charge of managing exchange-traded funds?

    An exchange-traded fund (ETF) is a security that tracks an index but has the flexibility of trading like a stock. Just like ... Read Answer >>
  2. What is the difference between iShares, VIPERs and Spiders?

    iShares, VIPERs and spiders each represent different exchange-traded fund (ETF) families. In other words, an individual company ... Read Answer >>
  3. How does a point change in a major index effect its equivalent exchange-traded fund?

    The S&P 500 and Dow Jones Industrial Index (DJIA) are two of the most well-known indexes tracking the movement of the U.S. ... Read Answer >>
  4. What's the difference between an index fund and an ETF?

    Learn about the difference between an index fund and an exchange-traded fund and how index fund investing compares to value ... Read Answer >>
  5. Should I invest in ETFs or index funds?

    Learn advantages to investing in exchange-traded funds, or ETFs, and index funds, and decide whether to include them in your ... Read Answer >>
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  1. Spiders - SPDR

    A short form of Standard & Poor's depositary receipt, an exchange-traded ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Index ETF

    Exchange-traded funds that follow a specific benchmark index ...
  4. Exchange-Traded Mutual Funds

    Investopedia explains the definition of exchange-traded mutual ...
  5. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for ...
  6. Dividend ETF

    Any exchange-traded fund that seeks to provide high yields by ...
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