However, potential investor should be aware that SPY is structured as a unit investment trust and not a regulated investment company like other funds. Consequently, the structure prevents SPY from reinvesting dividends, holding securities that are not included in the index, like futures, or engage in securities lending. Investors may consider IVV due to its cheap 0.07% expense ratio, compared to SPY’s 0.09% expense ratio, and the iShares ETF’s better job matching the underlying index. Additionally, VOO is the cheapest of the bunch with a 0.05% expense ratio. Institutional investors, though, have stuck with SPY because of its robust liquidity and high daily volume. [Comparing Popular S&P 500 ETF Options]
Moreover, the Vanguard Mega Cap ETF (NYSEArca: MGC) andiShares S&P 100 ETF (NYSEArca: OEF) both target the largest U.S. companies. MGC includes 59.5% mega-caps and 38.2% large-caps. OEF holds 83.3% mega-caps and 16.7% large-caps.
For more information on large multinational companies, visit our large-cap category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of SPY.