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DailyBubble News

Should SPDR S&P 500 ETF (SPY) Be on Your Investing Radar?

The SPDR S&P 500 ETF (SPY) was launched on 01/29/1993 and is a passively managed exchange-traded fund that provides broad exposure to the Large Cap Blend segment of the US equity market. Sponsored by State Street Global Advisors, the fund has accumulated assets of over $496.38 billion, making it the largest ETF in this segment.

Large cap companies, with market capitalizations above $10 billion, are known for their stability and predictable cash flows compared to mid and small cap companies. Blend ETFs like SPY hold a mix of growth and value stocks, offering a balanced investment approach.

Cost is an important consideration when choosing an ETF, and SPY is one of the least expensive options with an annual operating expense of 0.09% and a 12-month trailing dividend yield of 1.31%. The fund has a significant allocation to the Information Technology sector, with top holdings including Apple Inc, Microsoft Corp, and Amazon.com Inc.

SPY aims to mirror the performance of the S&P 500 Index and has returned approximately 6.77% year-to-date and 29% in the last year. With a beta of 1 and standard deviation of 17.45% over the past three years, it is considered a medium-risk choice. The ETF effectively diversifies company-specific risk with about 504 holdings.

For investors seeking exposure to the Large Cap Blend segment, SPDR S&P 500 ETF is a suitable option with a Zacks ETF Rank of 3 (Hold). Alternatives like Vanguard S&P 500 ETF (VOO) and iShares Core S&P 500 ETF (IVV) track the same index but have slightly different asset sizes and expense ratios.

Passively managed ETFs like SPY are gaining popularity for their low cost, transparency, flexibility, and tax efficiency, making them ideal for long-term investors. For more information on this product and other ETFs, visit Zacks ETF Center.

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