Exchange-Traded Funds: SPDR S&P 500 ETF
The first, and most popular, ETF in the
SPDR S&P 500 ETF Objective
The objective of the SPY ETF is to duplicate as closely as possible, before expenses, the total return of the S&P 500 Index. As of 2008 almost, the S&P 500 Index had 525 million shares outstanding, with total net assets of just over $73 billion. SPY trades on the American Stock Exchange (AMEX) and is one of the most actively traded stocks, regularly trading more than 100 million shares per day and sometimes over 400 million shares per day.
Characteristic of S&P 500 Index
The S&P 500 is a market capitalization index of 500 of the largest companies in the
The index is composed of 10 main industrial sectors as determine by the Global Industrial Classification Standard (GICS).
Performance of SPDR S&P 500 ETF
|Year||S&P 500 Index||SPY ETF|
|Annualized returns as of S&P 500 Index and SPY ETF as of April 30, 2008|
The SPY ETF tracks the performance of the S&P 500 index very closely; most of the different between them is accounted for by SPY's expense ratio.
For many investors, the SPY represents a good core equity holding, in part because of its low cost (expense ratio). For example, at a closing price of $139.27 on May 21, 2008, 400 shares would have cost an investor $55,708.00 before commission. The expense ratio is .0945% which translates into an annual cost to the investor of about $53, based on the current amount invested. (For more on this, see 10 Reasons To Make ETFs The Core Of Your Portfolio.)
An investor could buy the SPY as a core portfolio holding to provide exposure to the
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