21 important things you should know about SPY ETF before you buy it

Milan Kovacevic May 22, 2019

Are you evaluating SPY ETF as a potential investment? Are you looking to get the full scoop on this fund, as well as learn about alternatives to investing in it? If so, you came to the right place.

In this SPY ETF review, we’ll address key questions our readers have been asking us about this fund, above and beyond what you can find in its prospectus, and on Morningstar or Yahoo Finance.

Here is what you’ll be able to find in this review:

  • The Basics: SPY performance, returns, expense ratio, holdings and dividend yield;
  • The Analysis: the pros and cons of investing in SPY ETF;
  • The Alternatives: other ETFs and mutual funds you should consider as alternatives to SPY.

And here is the list of questions we’ll answer:

  1. Describe SPDR S&P 500 (SPY).
  2. What is SPY underlying index?
  3. What are SPY holdings?
  4. How did SPY perform historically? What were the historical returns?
  5. How many up and down years did SPY have historically?
  6. What is SPY dividend yield?
  7. What is SPY expense ratio?
  8. What is SPY tax efficiency (tax-cost ratio)?
  9. What is SPY beta? How would you assess SPY risk?
  10. What is SPY Sharpe ratio?
  11. What are the pros of investing in SPY? What are SPY positives?
  12. What are the cons of investing in SPY? What are SPY negatives?
  13. Compare and contrast: SPY vs IWF.
  14. Compare and contrast: SPY vs IWM.
  15. Compare and contrast: SPY vs VFIAX.
  16. Compare and contrast: SPY vs VTSAX.
  17. Compare and contrast: SPY vs VWO.
  18. Compare and contrast: SPY vs QQQ.
  19. Compare and contrast: SPY vs IVV.
  20. Compare and contrast: SPY vs VTI.
  21. Compare and contrast: SPY vs VOO.

So let’s start. Scroll down to the question that interests you the most.

The Basics

1. Describe SPDR S&P 500 (SPY).

The Trust seeks investment results that, before expenses, generally correspond to the price and yield performance of the component common stocks of the S&P 500 Index.

2. What is SPY underlying index?

S&P 500.

3. What are SPY top holdings?

SPY has 505 stock holdings and 0 bond holdings.

The top 10 holdings represent 21.48% of total assets. Here are the top holdings:

NameSymbol% Assets
Microsoft CorpMSFT3.82%
Apple IncAAPL3.67%
Amazon.com IncAMZN3.13%
Facebook Inc AFB1.76%
Berkshire Hathaway Inc BBRK.B1.68%
Alphabet Inc Class CGOOG1.54%
Alphabet Inc AGOOGL1.51%
Johnson & JohnsonJNJ1.49%
JPMorgan Chase & CoJPM1.48%
Exxon Mobil CorpXOM1.40%

4. How did SPY perform historically? What were the historical returns?

SPY has generated the following returns:

  • 1-month return is -1.25%;
  • 3-month return is 3.51%;
  • 1-year return is 7.13%;
  • 3-year return is 13.95%;
  • 5-year return is 10.92%;
  • 10-year return is 14.70%;
  • 15-year return is 8.80%.

5. How many up and down years did SPY have historically?

In the last 10 years, SPY had 9 up years and 1 down year.

6. What is SPY dividend yield?

SPY yield is 1.83%.

7. What is SPY expense ratio?

SPY expense ratio is 0.09%. The expense ratio of a fund is the total percentage of fund assets used for administrative, management, and all other expenses.

8. What is SPY tax efficiency (tax-cost ratio)?

  • 1-year ax cost ratio is 0.77%;
  • 3-year ax cost ratio is 0.82%.

9. What is SPY beta? How would you assess SPY risk?

  • 3-year beta is 1.00;
  • 5-year beta is 1.00;
  • 10-year beta is 1.00;
  • 15-year beta is 1.00.

10. What is SPY Sharpe ratio?

  • 3-year Sharpe ratio is 1.11;
  • 5-year Sharpe ratio is 0.91;
  • 10-year Sharpe ratio is 1.19;
  • 15-year Sharpe ratio is 0.57.

The Analysis

11. What are the pros of investing in SPY? What are SPY positives?

The following are SPY strengths from our perspective:

  • SPY net assets are $277.52 billion. This fund is a popular choice with retail and institutional investors.
  • SPY 3-year return is 13.95%, which is in line with the 3-year return of the benchmark index (S&P 500 TR USD), 14.07%.
  • SPY 5-year return is 10.92%, which is in line with the 5-year return of the benchmark index (S&P 500 TR USD), 11.04%.
  • SPY 10-year return is 14.7%, which is in line with the 10-year return of the benchmark index (S&P 500 TR USD), 14.85%.
  • SPY 15-year return is 8.8%, which is in line with the 15-year return of the benchmark index (S&P 500 TR USD), 8.91%.
  • SPY expense ratio is 0.09%, which is considered low. Nice job picking a low-cost fund.

12. What are the cons of investing in SPY? What are SPY negatives?

There are no visible red flags.  Overall, it's a good ETF that tracks S&P 500.

The Alternatives

13. Compare and contrast: SPY vs IWF.

Both SPY and IWF are ETFs. SPY has a lower 5-year return than IWF (10.92% vs 13.6%). SPY has a lower expense ratio than IWF (0.09% vs 0.2%). Below is the comparison between SPY and IWF.


SPYIWF
SegmentEquity: U.S. - Large CapEquity: U.S. - Large Cap Growth
Net Assets$277.52B$44.70B
Expense Ratio0.09%0.2%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500Russell 1000 Growth Index
YTD Return14.87%17.76%
1-Year Return7.13%9.83%
3-Year Return13.95%17.53%
5-Year Return10.92%13.6%
10-Year Return14.7%16.43%
Dividend Yield1.83%1.12%

IWF profile: The Fund seeks investment returns that correspond generally to the price and yield performance, before fees and expenses, of the Index. Uses a replication strategy. The Index measures the performance of the large-capitalization growth sector of the US equity market.

14. Compare and contrast: SPY vs IWM.

Both SPY and IWM are ETFs. SPY has a higher 5-year return than IWM (10.92% vs 8.36%). SPY has a lower expense ratio than IWM (0.09% vs 0.2%). Below is the comparison between SPY and IWM.


SPYIWM
SegmentEquity: U.S. - Large CapEquity: U.S. - Small Cap
Net Assets$277.52B$44.23B
Expense Ratio0.09%0.2%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500Russell 2000 Index
YTD Return14.87%14.46%
1-Year Return7.13%-4.27%
3-Year Return13.95%13.36%
5-Year Return10.92%8.36%
10-Year Return14.7%13.94%
Dividend Yield1.83%
1.25%

IWM profile: The Fund seeks to track the investment results of the Russell 2000 Index which measures the performance of the small-capitalization sector of the US equity market.

15. Compare and contrast: SPY vs VFIAX.

SPY is an ETF, whereas VFIAX is a mutual fund. SPY has a higher 5-year return than VFIAX (10.92% vs 10.81%). SPY has a higher expense ratio than VFIAX (0.09% vs 0.04%). Below is the comparison between SPY and VFIAX.


SPYVFIAX
SegmentEquity: U.S. - Large CapU.S. Equity: Large Blend
Net Assets$277.52B$249.11B
Expense Ratio0.09%0.04%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500N/A
YTD Return14.87%11.01%
1-Year Return7.13%3.61%
3-Year Return13.95%16.49%
5-Year Return10.92%10.81%
10-Year Return14.7%15.26%
Dividend Yield1.83%1.9%

VFIAX profile: The Fund seeks to track the performance of its benchmark index, the S&P 500. The Fund employs an indexing investment approach. The Fund attempts to replicate the target index by investing all of its assets in the stocks that make up the Index with the same approximate weightings as the Index.

16. Compare and contrast: SPY vs VTSAX.

SPY is an ETF, whereas VTSAX is a mutual fund. SPY has a higher 5-year return than VTSAX (10.92% vs 10.37%). SPY has a higher expense ratio than VTSAX (0.09% vs 0.04%). Below is the comparison between SPY and VTSAX.


SPYVTSAX
SegmentEquity: U.S. - Large CapU.S. Equity: Large Blend
Net Assets$277.52B$202.15B
Expense Ratio0.09%0.04%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500N/A
YTD Return14.87%11.92%
1-Year Return7.13%3.89%
3-Year Return13.95%17%
5-Year Return10.92%10.37%
10-Year Return14.7%15.46%
Dividend Yield1.83%1.87%

VTSAX profile: The Fund seeks to track the performance of a benchmark index that measures the investment return of the overall stock market. The Fund employs an indexing investment approach to track the performance of the CRSP US Total Market Index. The Fund invests by holding a collection of securities that approximates the Index.

17. Compare and contrast: SPY vs VWO.

Both SPY and VWO are ETFs. SPY has a higher 5-year return than VWO (10.92% vs 1.43%). SPY has a lower expense ratio than VWO (0.09% vs 0.12%). Below is the comparison between SPY and VWO.


SPYVWO
SegmentEquity: U.S. - Large CapEquity: Emerging Markets - Total Market
Net Assets$277.52B$65.55B
Expense Ratio0.09%0.12%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500FTSE Emerging Markets All Cap China A Inclusion Index Net TR US RIC
YTD Return14.87%5.38%
1-Year Return7.13%-9.29%
3-Year Return13.95%9.34%
5-Year Return10.92%1.43%
10-Year Return14.7%5.73%
Dividend Yield1.83%2.57%

VWO profile: The Fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in emerging market countries. The Fund employs an indexing investment approach designed to track the FTSE Emerging Markets All Cap China A Inclusion Index by sampling the Index.

18. Compare and contrast: SPY vs QQQ.

Both SPY and QQQ are ETFs. SPY has a lower 5-year return than QQQ (10.92% vs 17%). SPY has a lower expense ratio than QQQ (0.09% vs 0.2%). Below is the comparison between SPY and QQQ.


SPYQQQ
SegmentEquity: U.S. - Large CapEquity: U.S. - Large Cap
Net Assets$277.52B$72.64B
Expense Ratio0.09%0.2%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500NASDAQ-100 Index
YTD Return14.87%18.87%
1-Year Return7.13%9.69%
3-Year Return13.95%21.28%
5-Year Return10.92%17%
10-Year Return14.7%19.74%
Dividend Yield1.83%0.80%

QQQ profile: The Fund seeks to provide investment results that generally correspond to the price and yield performance of the Nasdaq-100 Index. The Index measures the average performance of a broadly diversified group of equity securities issued by 100 of the largest non-financial companies listed on The NASDAQ Stock Market, Inc.

19. Compare and contrast: SPY vs IVV.

Both SPY and IVV are ETFs. SPY has a lower 5-year return than IVV (10.92% vs 10.99%). SPY has a higher expense ratio than IVV (0.09% vs 0.04%). Below is the comparison between SPY and IVV.


SPYIVV
SegmentEquity: U.S. - Large CapEquity: U.S. - Large Cap
Net Assets$277.52B$175.25B
Expense Ratio0.09%0.04%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500S&P 500
YTD Return14.87%14.88%
1-Year Return7.13%7.24%
3-Year Return13.95%14.02%
5-Year Return10.92%10.99%
10-Year Return14.7%14.76%
Dividend Yield1.83%1.92%

IVV profile: The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P 500 Index. Uses a replication strategy to try to track the Index, which includes approximately 77% of the market capitalization of all publicly traded US equity securities.

20. Compare and contrast: SPY vs VTI.

Both SPY and VTI are ETFs. SPY has a higher 5-year return than VTI (10.92% vs 10.64%). SPY has a higher expense ratio than VTI (0.09% vs 0.03%). Below is the comparison between SPY and VTI.


SPYVTI
SegmentEquity: U.S. - Large CapEquity: U.S. - Total Market
Net Assets$277.52B$112.34B
Expense Ratio0.09%0.03%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500CRSP US Total Market Index
YTD Return14.87%15.2%
1-Year Return7.13%6.22%
3-Year Return13.95%14.05%
5-Year Return10.92%10.64%
10-Year Return14.7%14.92%
Dividend Yield1.83%1.94%

VTI profile: The Fund seeks to track the performance of a benchmark index that measures the investment return of the overall stock market. The Fund employs an indexing investment approach to track the performance of the CRSP US Total Market Index. The Fund invests by holding a collection of securities that approximates the Index.

21. Compare and contrast: SPY vs VOO.

Both SPY and VOO are ETFs. SPY has a lower 5-year return than VOO (10.92% vs 11%). SPY has a higher expense ratio than VOO (0.09% vs 0.03%). Below is the comparison between SPY and VOO.


SPYVOO
SegmentEquity: U.S. - Large CapEquity: U.S. - Large Cap
Net Assets$277.52B$110.69B
Expense Ratio0.09%0.03%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexS&P 500S&P 500
YTD Return14.87%14.91%
1-Year Return7.13%7.24%
3-Year Return13.95%14.03%
5-Year Return10.92%11%
10-Year Return14.7%14.8%
Dividend Yield1.83%1.97%

VOO profile: The Fund seeks to track the performance of its benchmark index, the S&P 500. The Fund employs an indexing investment approach. The Fund attempts to replicate the target index by investing all of its assets in the stocks that make up the Index with the same approximate weightings as the Index.

We hope this review was helpful to you and taught you the basics of investing in SPY (return, performance, yield, expense ratio, and holdings), the pros and cons of, and the alternatives to investing in SPY.

If you’d like to leave any comments, feel free to do so below.

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