designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the SPDR S&P 500 ETF (SPY) is a passively managed exchange traded fund launched on 01/29/1993.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $417.31 billion, making it the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.27%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector–about 27.80% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Microsoft Corporation (MSFT) accounts for about 6.32% of total assets, followed by Apple Inc. (AAPL) and Amazon.com Inc. (AMZN).
The top 10 holdings account for about 29.08% of total assets under management.
Performance and Risk
SPY seeks to match the performance of the S&P 500 Index before fees and expenses. The S&P 500 Index is composed of five hundred selected stocks, all of which are listed on national stock exchanges and span over 25 separate industry groups.
The ETF has lost about -4.28% so far this year and it’s up approximately 16.60% in the last one year (as of 03/29/2022). In the past 52-week period, it has traded between $394.73 and $477.71.
The ETF has a beta of 1 and standard deviation of 22.41% for the trailing three-year period, making it a medium risk choice in the space. With about 506 holdings, it effectively diversifies company-specific risk.
SPDR S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPY is an excellent option for investors seeking exposure to the Style Box – Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard S&P 500 ETF (VOO) and the iShares Core S&P 500 ETF (IVV) track the same index. While Vanguard S&P 500 ETF has $289.55 billion in assets, iShares Core S&P 500 ETF has $335.02 billion. VOO has an expense ratio of 0.03% and IVV charges 0.03%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>
Click to get this free report
SPDR S&P 500 ETF (SPY): ETF Research Reports
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Vanguard S&P 500 ETF (VOO): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.