To get an idea of the health of the US economy, investors and traders mostly follow the S&P500.
The US index contains the 500 most prominent companies in terms of market capitalization in the US.
The SPY ETF or The SPDR S&P 500 ETF Trust replicates the S&P500 so that investors and traders have become more interested in the ETF than the index itself.
But what is SPY ETF? and how can you invest in it? This article will give you everything you need to know to invest surely and wisely.
What is SPY?
You can't grasp what SPY is without knowing the S&P500, so let's start by demystifying that.
Even if you are new to the financial market, you probably heard of the S&P 500, the most prominent American stock index.
The S&P 500 contain 500 US-based companies, the country's most popular and profitable companies.
Standard & Poor'sPoor's, a leading financial rating company, owns and manages the index. The index represents approximately 80% of the US stock market by capitalization.
Well, the SPY or The SPDR S&P 500 ETF Trust is an ETF that tracks the performance of this index and is considered one of the best US ETFs. In fact, SPY is considered one of the best ETFs in the USA, alongside QQQ. To find out which is better, read our SPY vs QQQ comparison.
To understand better what an ETF is? You can check our guide.
| Ticker | SPY |
|---|---|
| Issuer | State Street Global Advisors |
| Expense Ratio | 0.09% |
| Asset under management(AUM) | $356.63B |
| Underlying index | S&P 500 |
SPY Pros and Cons
Pros:
- High Liquidity
- Considerable Fund size
- Good Reputation
- Easy to invest on
Cons:
- Slightly higher fees
- Exclude small and mid-cap
SPY Holdings
Those are the top 10 holdings of the SPY ETF as of 19/07:
| COMPANY | TOTAL NET ASSETS | SYMBOL |
|---|---|---|
| Apple Inc | 6.59% | AAPL |
| Microsoft Corp. | 5.82% | MSFT |
| Amazon.com Inc. | 3.00% | AMZN |
| Alphabet Inc. Cl A | 1.95% | GOOGL |
| Tesla Inc. | 1.81% | TSLA |
| Alphabet Inc. Cl C | 1.81% | GOOG |
| Berkshire Hathaway Inc. Cl B | 1.65% | BRK.B |
| Johnson & Johnson | 1.35% | JNJ |
| UnitedHealth Group Inc | 1.34% | UNH |
| NVIDIA Corp. | 1.33% | NVDA |
Historic performance
| Year | SPY |
|---|---|
| 2021 | 28.59% |
| 2020 | 18.40% |
| 2019 | 31.29% |
| 2018 | -4.45% |
| 2017 | 21.69% |
| 2016 | 11.80% |
| 2015 | 1.34% |
| 2014 | 13.53% |
| 2013 | 32.21% |
| 2012 | 15.84% |
We can see that the SPY ETF has given significant returns over the years, except for rare negative returns.
The most negative years are
- 2008: -36.97%
- 2002: -22.12%
- 2001: -11.86%.
Those periods are mostly the burst of the internet bubble in 2000 and the subprime crisis in 2008.
But we should note that the SPY rebound heavily after the end of the problem.
That's the best time and opportunity to buy ETFs.
Trailing Returns (%)
| Period | Performance |
|---|---|
| 1-year | -12.11% |
| 3-years | 9.69% |
| 5 -years | 11.74% |
| 10- years | 12.91% |
If you invested $1000 in July 1992, your investment would be worth now $16235!
How to invest in SPY
- Step 1: Choose the right broker
- Step 2: Open a trading account
- Step 3: Make your first deposit
- Step 4: Invest in SPY
Our Top Brokers for SPY ETFs
- eToro (full review here)
- Degiro (full review here)
Step 1: Choose the right broker.
Before investing in SPY, you must have the perfect broker tailored to your financial goals.
Our comparison page is the ideal tool to find the right broker or trading platform to start investing in SPY for beginners.
Step 2: Open a trading account.
On our comparison page, you can click on the button next to the right broker you choose, you will get the sign-up page, and then you can complete your account opening.
Most brokers require you to verify your identity by sending an ID and other additional documents. Depending on the broker, it may take a few hours to several days.
Step 3: Make your first deposit.
After having your account ready, you can start by making your first deposit.
You can do it in several ways:
- Bank transfers,
- Credit/debit cards,
- Paypal
Step 4: Invest in SPY
Tap "SPY" on the search bar; then, you need to click on buy to invest in the SPY ETF.
The current price of SPY is $387.
Conclusion
The best decision you can make is to invest in the SPY right now. Stock markets are low, and as we said before, it's a winning investment decision over the long term.
SPY is one of the best US ETFs. As long as the US economy is doing well, the SPY will give you remarkable returns over the years.
The only thing missing is a broker or a platform that lets you get the best of the SPY, so head toward our comparison tool and find your best broker to start investing in SPY immediately.
