The S&P 500: One Index, Many ETF Plays
April 30th 2010 at 1:00pm by Tom Lydon
Whether you’re a bear or a bull, the S&P 500 is one of the best indicators our economy has. Regardless of your views, there are several S&P 500 exchange traded funds (ETFs) that can help accomplish different goals.
There is no telling what the markets are going to do next. Many analysts are awaiting more justification for a recovery, while investors are hopeful that the bottom has long since been reached. Gary Gordon for ETF Expert says that bulls maintain that we’re witnessing a V-shaped economic recovery in a low-rate environment that is perfect for stock growth. Bears maintain that stocks will fall because governments will remove economic stimulus, interest rates will rise, taxes will climb and consumer spending will remain tepid. [An S&P 500 ETN Linked to Gold.]
- If you decide to invest in the S&P 500 via either iShares S&P 500 (NYSEArca: IWV) or S&P 500 SPDR Trust (NYSEArca: SPY) for capital appreciation, you should have a stop-loss and use a simple trend-following strategy to protect yourself. [How to Follow Trends.]
- Dividends via the SPDR S&P Dividend Fund (NYSEArca: SDY) can also give good exposure to the larger U.S. companies, but beware when market conditions give way to threaten dividend growth. SDY currently is yielding 3.4%, better than many other areas. [The Basics of ETFs.]
- The S&P 500 is market-cap weighted, but if you’re leery of that, the Rydex S&P Equal Weight (NYSEArca: RSP) may be an option. In it, the biggest S&P component and the smallest are on a level playing field. This strategy is working in RSP’s favor year-to-date; it’s up 13.5% compared with SPY’s 8.5%.
For more stories about asset class ETFs, visit our asset class ETF category.
- iShares S&P 500 (NYSEArca: IWV)
- S&P 500 SPDR Trust (NYSEArca: SPY)
- SPDR S&P Dividend Fund (NYSEArca: SDY)
- Rydex S&P Equal Weight (NYSEArca: RSP)
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.