SPDR S&P 500SPY

Morningstar Rating

ETF Research and Analysis

by Bradley Kay
Suitability

This fund is a fine core equity holding due to its diverse sector allocation, relatively low-volatility stocks, and low expenses. It lacks exposure to small-cap stocks, but the S&P 500 is frequently used as a proxy for the full U.S.  Read more 

Bull Case

With 500 individual holdings, this ETF is broadly diversified across both companies and sectors. As a result, volatility here has been below average.
This is one of the cheapest ETFs available, and has among the lowest expense ratios of any ETF tracking the S&P 500.
This is the most actively traded ETF by dollar volume, which helps keep the bid-ask spreads small and the market price close to net asset value, reducing tracking error. Read more 

Bear Case

This fund's atypical legal structure prohibits it from lending securities, which most index fund managers use to produce extra income that can help cover the expense ratio.
As a unit investment trust, this fund also cannot reinvest dividends or purchase futures or options on the index, which leads to greater tracking error especially in up or down markets. Read more 

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