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The Daily Dose: Questions For Stock Traders

What is the SPDR S&P 500 Trust ETF (Ticker: SPY)?

By April 3, 2018No Comments

SPDR S&P 500 Trust ETF Trades Under Ticker SPY:

The SPDR S&P 500 Trust ETF (SPY) is an Exchange Traded Fund (ETF) that aims to track the performance of Standard & Poor’s 500 Index (S&P 500). In other words, SPY is a basket of assets, mainly comprised of stocks within the S&P 500 itself, that seeks to provide investment results that correspond with the price and yield of the S&P 500. The total market value of holdings within SPY is roughly $275 billion with average daily volume in excess of 100 million shares, making it the largest and most liquid ETF in the world. SPY launched in 1993 as the first US listed ETF and essentially jumpstarted a trillion-dollar industry. You can now find thousands of ETF’s to trade or invest in that track the performance of various indices, sectors, commodities, etc.

For some background, the S&P 500 is comprised of about 500 mid and large-cap US stocks chosen by a committee. Some of its main holdings are Apple Inc. (AAPL), Microsoft Corp. (MSFT), Johnson & Johnson (JNJ), and General Electric Company (GE). This index serves as one of the main benchmarks of the US equity market, in addition to the Dow Jones Industrial Average (DJIA) and NASDAQ. These top 3 indices are often used to gauge the overall stability of the market and health of the economy. If these indices are down-trending, then there’s pessimism in the market, and if they’re up-trending, then there’s optimism in the market. Since inception, the S&P 500 ETF (SPY) has returned over 9% per year. One of the main reasons investors turn to it is for efficiency. Instead of having to purchase each individual stock yourself in order to achieve similar returns, you can simply receive diversified exposure to the US large-cap equities market through SPY.

Related Post: What is an Exchange Traded Fund (ETF)?

Matt Thomas

Founder of TradingParadigm.com, Creator of the Trading Success Framework Course & Trading Paradigm Skool Community, and Intraday Futures Trader Using Auction Market Theory & Profiling (Volume & Market Profile).

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