For exchange-traded fund (ETF) investors, the SPDR S&P 500 ETF (NYSEArca: SPY) has been a staple fund for many years. Not only is it lauded for its volume and liquidity, it’s also been a strong gainer, hitting a new all-time high at $294.78 at 11:42am ET today — up over 18 percent year-to-date.
SPY’s previous all-time high was $294.45 set in September 2018.
“It’s the bellwether of all ETFs,” said ETF Trends CEO Tom Lydon. “26 years ago, it was created so this whole 10-year bull market, we continue to see more and more money going in.”
The underlying macro trend in SPY highlights the propensity for ETF investors to remain resilient in the current market landscape. Last year, ETFs received $314 billion worth of inflows despite a challenging 2018–a drop from the $466 billion the previous year, but given the challenges of 2018, an impressive figure nonetheless.
Compare that to mutual funds, which have been trailing ETFs in terms of organic growth rate, the estimated net flow over a period divided by beginning net assets, within the last 10 years according to Morningstar. In fact, the average 10-year growth rate over ETFs is 16 percent versus the paltry 2 percent for mutual funds.
Thus far this year, ETF inflows have managed to accumulate over $70 billion. Much of the credit can be to a strong start for U.S. equities in 2019, which has seen the S&P 500 and Nasdaq Composite reach record highs the past week.
Much of the enthusiasm has been due to better-than-expected first-quarter GDP numbers published by the Commerce Department. Despite a number of roadblocks heading into 2019 after a rough fourth-quarter market showing to end 2018, the U.S. economy rebounded in the first quarter this year, beating analysts’ expectations of 2.5 percent growth with a 3.2 percent growth number.
The GDP figure represents the strongest rate of growth for the first quarter in four years and matches the 3.2 percent growth experienced a year ago.
“The economic expansion will set new records for longevity in July and it looks like there is no stopping this economy,” said Chris Rupkey, chief financial economist at MUFG, in a note. “We had all but given up on the first quarter with the Federal government shutdown ending January 25, frigid winter weather conditions shutting down manufacturing production, and the fears of a world growth slowdown.”
“So far the fears are unfounded,” Rupkey said.
Under the SPY’s Hood
Key features of the fund:
- The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index (the “Index”)
- The S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven GICS sectors
- Launched in January 1993, SPY was the very first exchange traded fund listed in the United States
As for its top holdings, SPY has a mix of heavy hitters:
For more market trends, visit ETF Trends.