The Standard & Poor's 500 Index, or simply S&P 500, is a market-capitalization-weighted index of 505 large-cap U.S. companies that make up 80% of U.S. equity by market cap. It is widely regarded as the best gauge of large-cap U.S. equities and often referred to as “the market” because it is comprised of stocks that span all market sectors. Some of the S&P 500's largest components include Microsoft Corp. (MSFT), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Alphabet Inc. (GOOGL), and Facebook Inc. (FB).
There are many funds whose portfolio of stocks are designed to track those of the S&P 500 due to its popularity as a barometer of U.S. equity markets, including both mutual funds and exchange-traded funds (ETFs). The latter type of fund differs from traditional mutual funds in that they are listed on exchanges and trade throughout the day like ordinary stock.
Below we look at the top S&P 500 index funds, one with the lowest fees and the other with the highest liquidity. All data is below is as of March 12, 2020.
Lowest Cost S&P 500 Index Fund: Fidelity 500 Index Fund (FXAIX)
FXAIX is a mutual fund. Because index-tracking funds will follow the performance of the Index, one of, if not the, biggest determinant of long-term returns is how much it charges in fees.
- Expense Ratio: 0.015%
- Performance over 1-Year: 0.45%
- Annual Dividend Yield: 2.13%
- Assets Under Management: $219,332.0 million
- Inception Date: February 17, 1988 (Share Class Inception Date: May 15, 2011)
- Issuing Company: Fidelity
SPY is an ETF. Liquidity indicates how easy it will be to trade an ETF, with higher liquidity generally meaning lower trading costs. Trading costs are not a big concern to people who want to hold ETFs long term, but if you’re interested in trading ETFs frequently, then it’s important to look for high liquidity funds to minimize trading costs.
- Performance over 1-Year: 10.2%
- Expense Ratio: 0.09%
- Annual Dividend Yield: 1.86%
- 3-Month Average Daily Volume: 91,716,288
- Assets Under Management: $264,518.7 million
- Inception Date: January 22, 1993
- Issuing Company: State Street SPDR