Connect with us

Stocks

The SPDR S&P 500 ETF Is a Proven Performer in Times of Market Volatility

The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is a mutual fund that tracks the S&P 500 Index. The fund was launched in 1993 and is one of the most popular ETFs in the world. Well renowned for its SPY ticker, it is an acronym for the Stand…

The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is a mutual fund that tracks the S&P 500 Index. The fund was launched in 1993 and is one of the most popular ETFs in the world. Well renowned for its SPY ticker, it is an acronym for the Standard & Poor’s depository receipts, its former name. It is the largest ETF in the world. Therefore, SPY stock is as safe as you can get in terms of investment.

Source: Pavel Ignatov/Shutterstock.com

Advertisement

SPDR S&P 500 Trust ETF has an expense ratio of 0.09%, which means it charges around $9 per $10,000 invested for its services. This makes it a very cost-effective investment for large-scale investors.

Value investors believe that companies should only invest in assets with a higher return than their cost, while Growth Investors are willing to take on more risk if they think there will be greater profit from it.

Advertisement

Each approach has its set advantages. Even though both methods can produce stellar results, each should be employed in a specific scenario. One way where value investing shines is when short-term performance matters most; this type does well under volatile markets, whereas growth capital would prosper during times without much fluctuation.

This ETF is a good way to diversify your stock portfolio and bring in extra cash.

Advertisement

SPY Stock: Taking the Safer Option

Index funds have been around for a long time and are considered the most effective way of investing. They provide an easy and reliable strategy for those looking to diversify their assets and minimize changes in value.

Advertisement
  • 7 Sin Stocks to Buy if the Economy Slows Down

The SPY ETF is a popular and high-volume trading vehicle covering the top 500 major US companies. This means it typically has an average volume of over 70 million shares per day, but this also varies from time to date, depending on market conditions.

Companies like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) make up some of the biggest holdings on SPY, due to their incredibly large market caps over $1 trillion. They are also the dominant players in their respective industries.

The indexing portion means this type of investment will always reflect changes made within your country’s economy; if we see an increase, then you’ll get more units back after taxes, while if there were decreases, they’d lose value accordingly, too.

Advertisement

Sometimes, the price of a stock isn’t an accurate reflection of how much it is actually worth. This means that buyers and sellers can push prices above or below what they should be for each holding to make money off their intuition, rather than relying solely on solid information about said company’s worthiness as well as other traders’ expectations for how valuable those shares might eventually become again if nothing else disrupts them first.

S&P 500 Index Is Seen as More Tech-Heavy Than Ever

It is always a great time to buy SPY stock if you’re a long-term investor. The S&P 500 has averaged about a 10% return over the long term, keeping up with inflation and providing investors with a steady stream of income from the company’s regular shares.

Advertisement

How would you feel if your investments were tied to the S&P 500? The index is arguably one of, if not the most important measure used by investors and traders around the world.

SPY stock has a list of top-heavy stocks since it owns the biggest ones. You can monitor the value of your company’s holdings at any time by visiting the site. Anyone can see the holdings, and you’ll never have to worry about being blindsided. SPY weights stocks by considering the value of each tradeable stock. This means large companies dominate it, with just 15 most-valuable firms accounting for roughly a third of its overall worth.

Advertisement

Another big benefit of SPY Stocks is that they give you investment exposure to 11 different sectors. This way, your investment dollars go across multiple industries, and you’re able to diversify risk. Technology stocks like Apple and Alphabet (NASDAQ:GOOG, GOOGL) take over the market and make up most of the SPY’s top spots. The other major sectors include health care and consumer discretionary.

Advertisement

Some of the largest companies across the nation issue dividends, and SPY automatically collects from all of them. On top of that, the current dividend yield is about 1.3%. On top of it being a great historical return on investment, it also pays a nice dividend on top.

Not the Only Game in Town

SPY might be the biggest ETF tracking S&P 500, but it’s not alone. One popular alternative the Vanguard S&P 500 ETF (NYSEARCA:VOO), which offers lower fees than its competitor at only 0.03%.

Advertisement

Another option you can check out is the Vanguard Total Stock Market ETF (NYSEARCA:VTI). The fund is perfect for investors looking for a more diversified portfolio. This means that it will not just hold one company’s shares as an index does. Instead, this ETF contains all domestic U.S. businesses from small-cap companies down through large multinationals.

VTI’s stock portfolio mixes midcap, small-cap and blue-chip stocks. It’s expected to provide you with great returns. It also has an efficient expense ratio alongside an impressive assets under management (AUM) in the billions.

Advertisement

Finally, you have iShares Core MSCI EAFE ETF (BATS:IEFA). The IEFA index is designed for developed-market equities in Europe and Asia. The index covers 98% of the global equity market outside North America. However, they often place small-cap stocks on par with the major market indexes to ensure more diversification — something competing funds typically do not include.

The IEFA fund is a well-diversified investment that offers exposure to many different markets outside North America. With low ownership costs and an extensive portfolio, this product makes it attractive as a long-term investment.

Advertisement

External Factors Weighing Down the Market

Wall Street’s start of the year has been nothing but bad news, and it doesn’t seem like things will get any better soon. Soon interest rates will rise, which could create some difficulties. Rising rates affect borrowing costs in many areas of life. In December, consumer prices surged 7%, the biggest annual increase since 1982.

Advertisement

Several analysts now think that the Fed may raise interest rates in March. According to some analysts, they might even need to raise them four times this year.

Tech companies have been among the biggest losers in the last few months. These companies need a growing economy to do well, and investors expect interest rate increases to slow economic growth. Higher interest rates make financial investments less attractive since they take away the potential for future profits. The consumer-discretionary industry is also feeling a rough time right now.

Advertisement

The events of the past year have shown no signs of slowing down. From omicron to inflation, supply chain disruptions and labor shortages, it’s clear that these are not myths but rather realities we must plan around if you want your portfolio to thrive in today’s fast-paced world. Under these circumstances, SPY stock is a premium investment.

SPY Stock Is an All-Weather Investment

It’s not hard to determine which types of investors go down the self-sufficient strategy road. If you’re disciplined and focused on your game plan, then SPY might be worth looking into.

Advertisement

It represents an attractive investment for tactical traders and buy-and-hold investors with a consistently high return. If you want to invest in a stock that’s as close to perfect for long-term investing criteria as any other, then SPY is your best option.

SPY is one of the best plays you can find for your money. You will receive a quarterly dividend payment and keep your money safe in this low-risk investment.

Advertisement

On the publication date, Faizan Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

Advertisement

More From InvestorPlace

  • Stock Prodigy Who Found NIO at $2… Says Buy THIS Now
  • Man Who Called Black Monday: “Prepare Now.”
  • Get in Now on Tiny $3 ‘Forever Battery’ Stock

The post The SPDR S&P 500 ETF Is a Proven Performer in Times of Market Volatility appeared first on InvestorPlace.

InvestorPlace | Stock Market News, Stock Advice & Trading Tips

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *