Why SPY is a Popular Core ETF Portfolio Holding

Consequently, SPY has become the market’s go-to investment vehicle for both core and tactical exposure, especially among large institutional traders who want to quickly and efficiently go in and out of the market – SPY is the only ETF traded with a bid-ask spread of just a penny for more than 12 consecutive years.

“The S&P 500 is the most oft-cited proxy for the U.S. equity market,” Ben Johnson, director of global ETF research for Morningstar, said in a research note. “SPY is the most heavily traded exchange-listed fund in the world. This level of liquidity makes it very inexpensive to trade in large amounts, an attractive feature for traders and institutions with relatively short anticipated holding periods.”

The SPDR S&P 500 ETF currently holds about $233.8 billion in assets under management, or 59% of the total assets invested in ETFs tracking the popular S&P 500 Index. SPY competes against the less actively traded , iShares Core S&P 500 ETF (NYSEArca: IVV), which has $102.3 billion in assets, and Vanguard 500 Index (NYSEArca: VOO), which has $63.6 billion in assets.

“A low fee and a soundly constructed and reasonably representative benchmark leave SPY well-positioned to continue its long streak of producing superior risk-adjusted returns relative to its category peers over the long haul,” Johnson added.

For more information on ETFs, visit our ETF 101 category.