The SPDR S&P 500 ETF Trust (SPY 0.46%) is the largest exchange-traded fund (ETF) globally, with assets totaling around $500 billion as of May 2024. Launched by State Street Global Advisors (STT 0.53%) in 1993, it is also the first U.S.-listed ETF and the most traded ETF worldwide.
If you’re interested in investing in the SPDR S&P 500 ETF Trust, you’re in the right place. We will discuss how the ETF works, how to purchase shares, its historical performance, and how to determine if it’s the right investment for you.
The SPDR S&P 500 ETF Trust is an ETF that tracks the performance of the S&P 500 index. When you buy shares of the fund, you are essentially investing in the 500 companies represented in the S&P 500 index. These companies make up roughly 80% of the value of the U.S. stock market.
Shares of the SPDR S&P 500 ETF, also known as the SPY ETF, are priced to represent about 10% of the value of the S&P 500 index. The goal of the ETF is to replicate the performance of the S&P 500 index as closely as possible, with returns slightly lower than the index due to minimal investment fees.
To buy the SPY ETF, you can trade it on stock exchanges just like regular stocks with a brokerage account. It’s essential to do your research and understand the fund’s prospectus and alternatives before investing. You can place an order by entering the fund’s ticker symbol, SPY, and specifying the number of shares or dollar amount you want to invest.
The top 10 holdings of the SPDR S&P 500 ETF Trust as of early May 2024 include companies like Microsoft, Apple, Nvidia, Amazon, and others. The ETF uses a float-adjusted market capitalization weighting similar to the S&P 500 index.
The SPDR S&P 500 ETF Trust pays a dividend based on dividends paid by the underlying companies in the S&P 500. It has an annual dividend yield of 1.39% as of March 31, 2024, and an expense ratio of 0.0945%.
Historically, the ETF has shown good performance over various holding periods. However, short-term market volatility can impact returns, making it more suitable for long-term investors.
Overall, the SPDR S&P 500 ETF Trust is a solid choice for investors seeking exposure to the U.S. stock market’s historical growth. Consider your investment goals and portfolio diversification before deciding if this ETF is right for you.