Are you an investor who fervently focuses on the S&P 500? The Select SPDRs Trust provides a selection of exchange traded funds (ETFs) that are comprised from the S&P 500 index.
The Sector SPDRs Trust is made of nine ETFs, which split the S&P 500 into pieces. There are no other stocks represented in the Sector SDPRs outside of the S&P 500.
Dan Dolan, director of wealth management strategies for Select Sector SPDRs, has stated that the average volume traded for all nine Select Sector SPDRs was 260 million shares a day and there was also an increase of 521.6 million shares outstanding in 2008, according to IndexUniverse.
This high volume has shown that a lot of institutional investors are more prone to invest in a basket of stocks instead taking risks with individual stocks.
While people still use SPDRs ETFs as a trading tool, some traders are using the investment themes to capitalize on the market trends, such as the short side of the market. The SPDRs have around 230 million shares outstanding in the short side.
Back in the day, circa 1998, SPDRs ETFs expense ratios were 0.65% each. Now, SPDRs have lowered expenses and they provide one of the lowest expense ratios of 0.21% each.
This is just one example of how ETF providers are getting creative in their strategies. It demonstrates the versatility of ETFs, along with their ease of use for the average investor. Wherever you choose to invest your money, always watch the trend lines and enter and exit with a set strategy in place.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.