How does spy etf work

And, what a better way to hold a bouquet of prized stocks through an exchange-traded fund ETF? An ETF, typically, tracks one specific index and, thus, investing in it means you end up buying all the stocks of the index in the same proportion as held in the index. The ETF has a management fee of 0.

Source: Bloomberg 4. Over the year period, the compounded annualised return has been nearly 13 per cent, while the 3-year and 5-year return has been about Even after the market crash of March , the 1-year return and the year-till-date return has been nearly 7. But SPY actually trades about five times as frequently as Apple. That's how popular it is. The fact that an ETF has leapfrogged mutual funds, long the giants in the investing world, shows how investors are quickly gaining comfort with this fast-growing asset class.

Related: The 5 hottest ETFs in the world. It's cheap! The other great benefit of SPY is how cheap it is. Most importantly, it should be noted that the three ETFs differ upon their strategy of reinvestment or payment of dividends. Article Sources. Investopedia requires writers to use primary sources to support their work.

These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Ready to Take the Next Step? The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear.

Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links. ETFs can contain investments such as stocks and bonds. Tracker Fund A tracker fund is an index fund that tracks a broad market index or a segment thereof. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes.

Your Money. Personal Finance. Your Practice. Popular Courses. Investing ETFs. Its top 10 holdings are heavily weighted in technology companies such as Apple, Microsoft, and Amazon—approximately one-quarter of the SPY ETF is invested in the technology sector. AAPL 6. AMZN 3. TSLA 1. NVDA 1. JPM 1. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.