Launched on January 29, 1993, the SPDR S&P 500 ETF (SPY) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Blend segment of the US equity market.
The fund is sponsored by State Street Investment Management. It has amassed assets over $658.08 billion, making it the largest ETF attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
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 1.1%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector -- about 33.5% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 8.17% of total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).
The top 10 holdings account for about 38.51% 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 added about 11.87% so far this year and is up about 20.15% in the last one year (as of 09/11/2025). In the past 52-week period, it has traded between $496.48 and $652.21.
The ETF has a beta of 1.00 and standard deviation of 16.74% for the trailing three-year period, making it a medium risk choice in the space. With about 504 holdings, it effectively diversifies company-specific risk.
Alternatives
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 iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO) track the same index. While iShares Core S&P 500 ETF has $667.88 billion in assets, Vanguard S&P 500 ETF has $742.33 billion. IVV has an expense ratio of 0.03% and VOO charges 0.03%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.
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SPDR S&P 500 ETF (SPY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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