What's Driving S&P 500 ETFs in 2024? | ETF Trends

While S&P 500 index-based ETFs were down 4% in April, they remained positive for the year. We believe as more institutional and retail investors turn to ETFs, these products will further swell in size. 

The three largest U.S.-listed ETFs are tied to the S&P 500 Index. The SPDR S&P 500 ETF (SPY) remains the biggest of the trio, with $500 billion in assets. The iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO) each have over $400 billion.  

SPY Hit an ETF Milestone in 2024 

SPY was the first ETF to trade in the U.S., in early 1993, and was the first fund to cross the $500 billion threshold, earlier this year. While the fund is used by retail investors, due in part to its strong brand, SPY particularly appeals to institutional investors. It trades more frequently than peers and has an extremely tight bid/ask spread. This is partially offset by a higher-than-peers’ 0.09% expense ratio. IVV and VOO charge 0.03%. 

What’s Driving the Index? 

In 2024, some of the mega-cap stocks inside SPY and peers were down as of April. However, the “Magnificent Seven” as a group still performed admirably. Led by Nvidia, the group contributed approximately half of the broader index’s return, according to S&P Dow Jones Indices.  

The index rose 5.6% for the first four months of 2024, with 10 of the 11 sectors up. Real estate, which is the smallest sector, was the lone sector in the red. Information technology was the largest sector (29%), but financials (13%), healthcare (12%), and consumer discretionary (10%) were also double-digit weightings. In April, market breadth was positive, as 302 constituents rose in value. 

As of the end of April, 64% of the S&P 500 market value companies reported first-quarter 2024 earnings. Three in four companies beat their operating earnings estimates, according to Capital IQ, while nearly six in 10 beat on sales. Earnings for the quarter were expected to increase 5% from the first quarter of 2023. 

Index ETFs Not Static 

While many people refer to IVV, SPY, and VOO as passive investments, there are changes made to index constituents. The S&P 500 Index now includes healthcare company Solventum and GE Vernova. The latter was spun off from General Electric in April. To make room last month, the index removed V.F. Corp and Dentsply Sirona. 

Many investors globally start their U.S. equity exposure with a stake in the S&P 500 Index using ETFs. The index remains hard to consistently outperform, and provides broad exposure to many of the leading companies. S&P 500 Index ETFs provide a low-cost, liquid way of accessing the market. 

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