Morningstar Rating

ETF Research and Analysis

by Michael Rawson, CFA
SPDR S&P 500 SPY offers investors diversified exposure to U.S. large-cap stocks. The S&P 500 is the most oft-cited proxy for the U.S. equity market and is viewed as an indicator of the economic health of the nation.  Read more 

Bull Case

With 500 individual holdings, this ETF is broadly diversified across both individual companies and sectors.
This is the most actively traded ETF by dollar volume, which helps keep bid-ask spreads small and the market price close to NAV, reducing trading costs. Read more 

Bear Case

This fund's legal structure prohibits it from lending securities, which most index fund managers use to produce extra income that can help improve performance.
As a unit investment trust, this fund cannot reinvest dividends or purchase futures or options on the index, which may create greater tracking error.
Because it lacks exposure to small-cap stocks, this ETF may be less attractive as a core U.S. equity holding than broader alternatives such as Vanguard Total Stock Market ETF. Read more 

Why Index Construction Matters for ETF Investors 
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