SPY ETF: The SPDR S&P 500 ETF Trust and What It Holds (2024)

The SPDR S&P 500 ETF Trust is one of the most popular funds. It aims to track the , which comprises 500 large-cap U.S. stocks. These stocks are selected by a committee based on market size, liquidity,and industry. The S&P 500 serves as one of the main benchmarks of the U.S. equity market and indicates the financial health and stability of the economy. Also known as the SPY ETF, the fund was established in Jan. 1993.

Key Takeaways

  • The SPDR S&P 500 ETF Trust is one of the most popular funds that aims to track the S&P 500 Index, which comprises 500 large-cap U.S. stocks.
  • SPY was the first index exchange-traded fund listed on U.S. exchanges.
  • Approximately one-quarter of the SPY ETF is invested in the information technology sector.
  • The SPDR S&P 500 ETF Trust has generated an average annual return of just under 10% since its inception.

Understanding the SPY ETF

As noted above, the SPY ETF was established on Jan. 22, 1993. It is an exchange-traded fund (ETF) that tracks the S&P 500 Index. It is often regarded as the first ETF to be listed and remains one of the most actively traded, even with the advent of competing S&P 500 ETFs. In fact, it is considered to be the original fund that tracks the S&P 500.

The ETF was introduced in 1993 and had just $6.53 million in assets under management (AUM) at the time. After a rough start and some initial difficulty finding investors, it soared to more than $1 billion in AUM three years later. As of Sept. 20, 2023, the ETF trust has an extraordinary $406.6 billion in assets.

SPY is listed on the New York Stock Exchange’s (NYSE) Arca exchange, and investors can trade this ETF on multiple platforms. The trustee of the SPDR S&P 500 ETF Trust is State Street Bank andTrust, and its distributor is ALPS Distributors. Because ETF shares trade in a similar manner to stocks, investors can buy and sell SPY shares via their broker throughout the day, including selling them short.

The price of a share of SPY is intended to be one-tenth that of the S&P 500 Index. So, if the S&P is at a level of 4,000, then one SPY share should trade at close to $400.

SPY turned 30 on Jan. 22, 2023, celebrating the milestone by remaining the largest ETF tracking the S&P 500 Index.

SPY ETF Portfolio Structure and Costs

Because of its relative age, the ETF is constructed as a unit investment trust (UIT). This means it's a fixed portfolio that forms units that can be created and redeemed with the issuer. Because of this structure, the SPY fully replicates the S&P 500 Index, holding all members of the underlying index at their target weights.

The SPY and other index ETFs provide investors a way to own the entire index by owning a single security for a low cost. As of Sept. 20, 2023, SPY has an expense ratio of 0.0945%. While this ratio is low, it is not the lowest among other ETFs that track the S&P 500 Index. SPY’s expense ratio is more than triple the ’s expense ratio of 0.03%. Keep in mind that these fees do not include any broker fees or commissions.

Several ETFs track the S&P 500 Index. Investors looking at such an ETF should consider the expense ratio, tracking error, and liquidity of the ETF before choosing one in which to invest.

SPY ETF Top Holdings

The SPY is a well-diversified basket of assets, which allocates its holdings across multiple sectors. The top five listed below are as of Sept. 21, 2023:

  • Information Technology: 27.16%
  • Healthcare: 13.41%
  • Financials: 12.99%
  • Consumer Discretionary: 10.70%
  • Communication Services: 8.80%

The SPDR S&P 500 ETF Trust allocates almost all of its funds into common stocks, which are included in the S&P 500 Index. Its current top 10 holdings are in the following companies:

SPY ETF’s Top 10 Holdings (as of Sept. 21, 2023)
Holding (Company)% SPY Portfolio Weight
Apple (AAPL)7.05%
Microsoft (MSFT)6.54%
Amazon (AMZN)3.24%
NVIDIA (NVDA)2.79%
Alphabet—Class A (GOOGL)2.13%
Tesla (TSLA)1.95%
Alphabet—Class C (GOOG)1.83%
Berkshire Hathaway—Class B (BRK.B)1.83%
Meta Platforms—Class A (META)1.81%
UnitedHealth (UNH)1.28%

SPY ETF Performance

With a four-star Morningstar rating, SPY’s returns have closely tracked the S&P 500, an index that has bested the average return of other large-blend funds in the past decade. The SPDR S&P 500 ETF Trust (SPY) has generated an average three-year return of 15.79% as of Aug. 31, 2023. Based on trailing 10-year data, the fund generated average annual returns of 12.66%. Since the inception of the SPDR S&P 500 ETF Trust, the fund achieved average annual returns of 9.92%.

This, of course, tracks the S&P 500’s performance with a beta of nearly 1.00. What is important to note is that the SPY ETF, as it fully replicates the index, has a very low relative tracking error—just -0.03% as of Aug. 31 2023.

SPY Turns 30

The SPY celebrated its 30th birthday on Jan. 22, 2023, by remaining the preeminent S&P 500 ETF despite having higher management fees compared to its younger rivals. While the SPY wasn’t a new strategy when it launched in 1993, it provided a revolutionary way to invest by trading similarly to a stock on an exchange.

Apart from a first-mover advantage, several factors have cemented the SPY’s longevity:

  • The fund has benefited from a growing transition to passive investment management. Although active management funds have taken the lion’s share of net inflows over much of the last 30 years, that trend switched in 2018.In 2021, the U.S. equity fund market share in passive funds reached 54%, partly due to the SPY’s successful long-term track record and growing AUM.
  • The S&P’s stellar performance, driven by large-cap technology stocks in the mid-to-late 1990s and after the Great Recession, helped the SPY to continue attracting further inflows. From 1995 to 1999, the blue-chip index gained an average of 28% per year, while from 2009 to 2022, it gained more than 400%.

The ETF’s $406.6 billion asset base, coupled with an average daily trading volume (ADTV) of around $28.5 billion, makes the fund popular with investors who want cost-effective exposure to the S&P 500 and traders who seek deep liquidity. The SPY’s broad appeal assures that it will remain at the forefront of financial markets for the foreseeable future.

Does the SPDR S&P 500 ETF Trust Pay a Dividend?

Yes. As of Sept. 20, 2023, the 12-month distribution yield for SPY is 1.48%.

Is SPY a Stock or Exchange-Traded Fund?

The SPY is an ETF. This is the broad name for a kind of security that aggregates or tracks multiple stocks within an index, industry, or another grouping. SPDRs are a specific type of ETF issued by State Street Global Advisors that tracks a certain index, such as the S&P 500. While ETFs may trade like ordinary shares of stock, they represent a portfolio of stocks and not just one company.

What Does SPDR Stand For?

SPDR stands for Standard & Poor’s Depositary Receipt. SPDR ETFs have a fixed number of shares that are exchanged and traded like stocks on the open market.

Is the SPDR S&P 500 ETF Trust a Good Investment?

Yes. The SPY ETF diversifies exposure to the U.S. equity market and is suitable for investors willing to take on a moderate level of risk. Since it tracks the S&P 500 Index, it is often a suitable choice for those seeking passive index investing.

How Much Money Is Invested in the SPY?

As of Sept. 20, 2023, the SPY has roughly $406.6 billion in assets under management.

The Bottom Line

The SPDR S&P 500 ETF Trust offers investors an efficient way to diversify their exposure to the U.S. equity market without having to invest in multiple stocks. Therefore, the SPY is suitable for any investors who want to include U.S. equities in their portfolio while taking only a moderate level of risk.

That being said, since the SPDR S&P 500 ETF Trust tracks 500 large-cap stocks in the United States, it carries a multitude of risks, such as market risk, country risk, currency risk, economic risk,and interest rate risk. Investors should be aware of both world and U.S. economic data, which could affect the performance of the fund.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.

  1. State Street Global Advisors. “SPDR® S&P 500® ETF Trust: SPY.”

  2. State Street Global Advisors. "SPY: The Original S&P 500® ETF."

  3. U.S. Securities and Exchange Commission. “SPY: The Idea That Spawned an Industry.”

  4. U.S. Securities and Exchange Commission. “Spiders (SPDRs).”

  5. ETF Database. "Largest ETFs: Top 100 ETFs by Assets."

  6. Vanguard, Personal Investors. “VOO: Vanguard S&P 500 ETF.”

  7. Morningstar. “SPDR® S&P 500 ETF Trust: SPY.”

  8. ETF.com. “SPY: SPDR S&P 500 ETF Trust.”

  9. Fidelity Investments. “Key Statistics: SPY.”

  10. OfficialData.org. “Stock Market Returns Between 2009 and 2022.”

  11. CNBC. “The First ETF Is 30 Years Old This Week. It Launched a Revolution in Low-Cost Investing.”

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As an enthusiast and expert in the field of exchange-traded funds (ETFs) and financial markets, I have closely followed the development and performance of various ETFs, including the SPDR S&P 500 ETF Trust (SPY). My knowledge is not just theoretical; I actively engage with financial data, market trends, and investment strategies.

Firstly, let's delve into the core concepts and information presented in the article about the SPDR S&P 500 ETF Trust:

  1. SPY ETF Overview:

    • The SPDR S&P 500 ETF Trust is a popular fund designed to track the S&P 500 Index, which consists of 500 large-cap U.S. stocks.
    • The stocks are selected based on market size, liquidity, and industry by a committee.
    • The S&P 500 serves as a key benchmark for the U.S. equity market, reflecting the financial health and stability of the economy.
  2. SPY ETF History:

    • Established on Jan. 22, 1993, SPY was the first index ETF listed on U.S. exchanges.
    • Despite a modest start, it quickly gained traction and became one of the most actively traded ETFs.
  3. SPY ETF Structure and Costs:

    • Structured as a unit investment trust (UIT), SPY fully replicates the S&P 500 Index, holding all index members at their target weights.
    • As of Sept. 20, 2023, it has an expense ratio of 0.0945%, which is higher than some competitors.
  4. SPY ETF Holdings:

    • The ETF has a diversified portfolio with approximately 27.16% allocated to the Information Technology sector.
    • The top 10 holdings include major companies such as Apple, Microsoft, Amazon, and others.
  5. SPY ETF Performance:

    • The SPY ETF has a commendable performance record, with an average annual return of just under 10% since its inception.
    • It closely tracks the S&P 500's performance with a beta of nearly 1.00 and maintains a low relative tracking error.
  6. SPY ETF's 30th Anniversary:

    • Celebrated its 30th birthday on Jan. 22, 2023, remaining the largest ETF tracking the S&P 500.
    • Factors contributing to its longevity include a growing shift to passive investment management and the S&P's stellar performance.
  7. Dividend and Fund Type:

    • As of Sept. 20, 2023, SPY pays a dividend with a 12-month distribution yield of 1.48%.
    • SPY is classified as an ETF, representing a portfolio of stocks that tracks an index, in this case, the S&P 500.
  8. Investment Suitability and Risks:

    • Considered a good investment for those seeking exposure to the U.S. equity market with a moderate level of risk.
    • Investors should be aware of various risks, including market, country, currency, economic, and interest rate risks.
  9. Fund Size:

    • As of Sept. 20, 2023, SPY has approximately $406.6 billion in assets under management (AUM).
  10. Sources and Additional Information:

    • Various sources, including State Street Global Advisors, U.S. Securities and Exchange Commission, Morningstar, and others, provide comprehensive data and insights.

In conclusion, the SPDR S&P 500 ETF Trust (SPY) stands out as a pioneering and enduring investment vehicle, offering investors an efficient way to gain exposure to the broad U.S. equity market. While its expense ratio is higher than some competitors, its historical performance, liquidity, and broad appeal contribute to its continued prominence in the financial markets.

SPY ETF: The SPDR S&P 500 ETF Trust and What It Holds (2024)

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