breaking news Best S&P 500 ETFs for this quarter
S&P 500 ETF Options offer investors a variety of ways to buy the 500 largest US companies, but with so many options, how do you know which fund fits your portfolio? Take a look at Benzinga’s top picks for the best S&P 500 ETFs.
A look at the best S&P 500 ETFs:
Learn more about ETFs
Using the criteria above, Benzinga has compiled a list of the best S&P 500 ETFs. Only 3 ETFs use the S&P 500 as a true benchmark; the others on this list track subtly different indices comprised of the same selection of stocks.
1. Best Overall: iShares Core S&P 500 ETF (IVV)
BlackRock’s iShares has developed a number of useful investment vehicles, but its S&P 500 ETF might be the best of the bunch. To boast a tiny expense ratio of 0.04%, this ETF closely tracks the S&P 500 and only slight deviations occur throughout the year (median 12-month tracking difference of -0.04%). The fund began trading in May 2000 and has returned 5.59% since inception.
Although smaller than its SPY counterpart, the IVV remains provides plenty of cash and discloses its holdings daily (unlike other S&P 500 ETFs). IVV is a great base holding for any long-term portfolio and you’ll save at tax time thanks to the fund’s structure. iShares fund advisors say they haven’t paid out capital gains in a decade and instead offer qualified dividends where high earners pay less tax. IVV is part of iShares’ core portfolio of ETFs, which are designed to form the basis of a long-term investment portfolio.
2. Best for low spend: Vanguard S&P 500 ETF (VOO)
Few investment firms have helped their clients cut costs as much as the Vanguard Group, whose founder Jack Bogle pioneered the use of index funds rather than actively managed mutual funds. Nor was Vanguard scared when venturing into the ETF space. Its S&P 500 ETF is an excellent base holding in any portfolio.
With a tiny expense ratio of 0.03%, VOO is one of the cheapest ETFs available today. It lacks the volume of its predecessor, SPY, but it trades over 3 million shares per day and is available at all major brokerages. VOO currently has over $100 billion in assets under management and almost exactly mirrors the S&P 500 since its inception in 2010, returning 13.49% versus 13.52% for the S&P.
3. Best for Liquidity and Volume: SPDR S&P 500 ETF Trust (SPY)
Oldies can still be good when it comes to index funds, and the very first ETF in the world, “born” in 1993, remains one of the strongest buys if you want to add broad exposure to the S&P 500 to your portfolio. The SPDR S&P 500 ETF Trust (SPY) was designed to track an index like the S&P 500.
The fund is a little more expensive than its peers IVV and VOO at 0.0945%, but the daily trading volume allows for a more liquid investment. SPY also differs from IVV and VOO in its fund structure.
As a unit investment trust (UIT), SPY does not reinvest dividends in the portfolio and avoids investors having to pay capital gains. ITUs have a set termination date and SPY is due to end on January 21, 2114.
4. SPDR S&P 500 ETF Portfolio (SPLG)
SPDR Portfolio S&P 500 ETF (SPLG) aims to track the total return performance of the S&P 500. You can take advantage of the low-cost SPDR Portfolio ETF range with this fund, which provides accurate and comprehensive exposure to the large US market segment. capitalization. core-exposure fundraising in line with the S&P indices.
The fund takes into account sector balance, minimum size and liquidity and is rebalanced quarterly. You might want to opt for SPLG if you are a retail investor, as the stock trades with a lower management and expense ratio than SPY. SPLG’s spend rate is a low, very low 0.03%.
5. Best for large caps: Schwab US Large Cap ETF (SCHX)
Many index funds competing with the Big 3 (IVV, VOO and SPY) track similar but different benchmarks to the S&P 500 Index. The Schwab US Large Cap ETF tracks the 780 largest cap stocks in the United States, giving exposure to an additional 280 companies not available in the strict S&P 500 index trackers.
The top 10 holdings are almost identical to the holdings of SPY, IVV and VOO, but with less weight on the big names like Apple, Microsoft and Amazon. The top 10 stocks make up only 19% of the fund, compared to 22% of the more strictly company-focused funds in the S&P 500. Despite this different structure, the SCHX tracks the S&P 500 quite closely and does it for a tiny expense ratio of 0.03%.
6. Best for maximizing gains: iShares S&P 500 Growth ETF (IVW)
Tracking the S&P 500 only guarantees market returns, so what should an investor do to beat the market without adding leverage? This is where the iShares S&P 500 Growth ETF comes in. Using 3 factors, IVW gives additional weight to companies with growth characteristics: earnings growth, sales growth and momentum.
Weighting stocks by these factors means that the fund lean heavily towards the technology part of the index and the top 10 holdings represent more than 34% of the fund’s holdings. A Spend rate of 0.18% makes this fund more expensive than SPY, IVV or VOO.
7. Best for mid-cap balances: Invesco S&P 500 Equal Weight ETF (RSP)
Based on the S&P 500 Equal Weight Index, RSP invests 90% of its assets in securities that are included in the equal weight index. The fund and index are rebalanced quarterly and often tilt towards mid-cap stocks.
The fund is diversified (from the largest to the smallest) as follows:
- Health care
- Consumer Discretionary
- Basic consumption
- Real estate
- Communication Services
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The Standard and Poor’s 500 is an index of the 500 largest companies in the United States by market capitalization traded on the New York Stock Exchange (NYSE) and NASDAQ. Formed in 1923, the first iteration was known as the “Composite Index” and tracked only a handful of stocks.
In 1957, the number was multiplied to 500 and the index was renamed S&P 500. The index has a different ticker symbol depending on the listing, but the most common are $SPX, ^GSPC And INX.
Today, 505 different companies make up the index. S&P 500 stocks are float-cap weighted, which means they are ranked by the total number of shares available for public trading. Stocks must meet 3 specific criteria to be included in the S&P 500:
- Market capitalization of over $6.1 billion.
- Dollar value of at least $1.
- Monthly trading volume of at least 250,000 shares.
Without the S&P 500, ETFs might never have existed. In 1993, State Street Global Advisors in Boston designed a new type of investment product. The new security would be a basket of stocks similar to a mutual fund but traded on an exchange during the day like the stocks that made it up. This first exchange-traded fund tracked the S&P 500, trading under the symbol SPY, and still does so today.
Benefits of Investing in S&P 500 ETFs
ETFs that track the S&P 500 have a number of advantages for investors, including:
- Exposure to a wider range of actions than indexes like the Dow Jones Industrial Average.
- Not as tech-heavy than the NASDAQ Composite.
- S&P 500 ETFs often feature some of the lowest expense ratios in industry.
- ETFs are more tax-efficient than mutual funds.
Disadvantages of Investing in S&P 500 ETFs
There are a few downsides to consider. It is an investment, after all, so you can’t completely avoid the risk.
- ETFs are less risky due to diversification, but gains will rarely exceed average market returns.
- You must consider short term capital gains tax consequences.
- Float-cap weighting means smaller companies often ignore ETFs.
What to look for in S&P 500 ETFs
Investors have no shortage of options when it comes to S&P 500 ETFs. Many funds make their own changes to stock allocation or selection, but the best ones keep it simple. Here’s what to look for when choosing an ETF:
- Availablity: Is this ETF widely available at most brokerages? How much trading volume occurs over an average 10-day period? You don’t want to buy an ETF that you’ll be stuck with if things go wrong, so make sure the one you buy has sufficient trading volume.
- Low fees: Since we are looking for funds that track an index, look for ones that keep fees to a minimum. After all, there’s no fund manager to pay when you buy ETFs.
- Closely follows the benchmark: Choose an S&P 500 ETF that In fact tracks the S&P 500. Each fund has its own special sauce, but you don’t want to stray too far from the benchmark.
Choose the best ETF for your portfolio
S&P 500 ETFs are a great way for investors to build a foundation for a long-term stock portfolio. ETFs that track the index have modest expense ratios, high liquidity, and are less risky than picking stocks yourself. Investors looking to build retirement savings should start with one of the ETFs on this list.
Frequently Asked Questions
Are there any risks with an ETF?
ETFs are subject to market risk. They are bought and sold to reflect real-time changes in stock market prices.
ETFs buy and sell stocks that track the value of the average they track, such as the Russell 2000. They trade on national exchanges at prevailing market prices.
Where can I find a list of ETFs to invest in?
You can find a great list of ETFs in the list above.