Alex Manea
SPY Vs SPX: What is the difference?
When you are a new investor, you must be confused with all the financial jargon that investment professionals use to describe what is happening on the market.
You probably already heard someone says that as a beginner, you should invest passively in an ETF or a stock index and let it run.
But how will you do that exactly? We will explain the main difference between the SPY Vs SPX, two different acronyms representing the S&P500, the most general US stock index.
First of all, let us make something clear, the SPY is the ticker for the SPDR S&P 500 ETF trust, an ETF that tracks the performance of the S&P 500.
An ETF(Exchange-traded Fund) is an investment vehicle that aims to reproduce the change in value (performance) of a given index and to provide the same return (net of the ETF's fees) as that index.
The SPX is the ticker of the indicator of the S&P500, which is only an index, not an ETF.
The SPDR S&P 500 ETF trades on the NYSE Arca exchange under the symbol "SPY." SPDR stands for Standard and Poor's Depositary Receipts.
It is an ETF that replicates the performance of the S&P500, the US index that contains the most prominent 500 stocks by market capitalization.
Please check our article, what is SPY? to get a clear idea.
SPX is only the symbol for the S&P500, you cant buy it directly, but you can trade it with CFD or via derivatives(Futures, options).
Most beginners confound the SPY and the SPX, but the difference is evident when you search for the symbols in a trading platform.
SPX is a stock market index created by Standard & Poor's, which gathers the 500 American stocks that are the most representative of the American economy.
First of all, the price of each symbol is different;
Then, if you want to invest in the S&P 500, you can buy all the 500 stocks that compose it, which might be impossible to do.
Or, you can simply buy the SPY, which trades at 398, meaning you can buy one share for $398.
There is another way to invest in the S&P500. Some brokers allow you to trade the index via CFDs (contracts for difference) which are sophisticated financial products that enable you to bet on whether an "underlying asset" (an index, a stock, etc.) will increase or drop without you owning it) or via futures trading.
Asset managers and professional investors prefer the SPY, but day traders and speculators tend to choose the SPX.
Most people think they can beat the market by buying and selling stocks absurdly, but they don't.
So, as a beginner, you should consider the SPY if you are a long-term investor.
If you want to trade and be a day trader, then the SPX is better suited for you.
Note that not all brokers allow you to buy the SPY, they must have ETF in their offer.
Whether you want to invest in the SPY, or trade the SPX, you will need the perfect Trading app to give you all the tools required for successful and profitable trading.
Our comparison page gives you all the insights you need to make your choice, simply fill in the required information, and based on that, we will present you with the best brokers and trading apps that match your needs.
SPY and SPX are practically the same, but you should consider your investment goals and investor profile before deciding which one you prefer.
But don't forget to check out our comparison page to ensure you get the best application to make your investments easier.
