The largest and most heavily traded ETF in the world is the SPDR S&P 500 ETF (SPY).  As of this writing the average daily trading volume is 159,000,000 shares per day.   It’s also one of the oldest with an inception date of January 22, 1993.

This ETF tracks the performance of the S&P 500 index which is maintained by Standard and Poor’s.  It contains 500 of the leading U.S. companies in the industries that are leading the U.S. economy.  Companies are added and deleted from the index on a regular basis.

The S&P 500 ETF – SPY seeks to replicate the price and yield performance, before fees and expenses, of the S&P 500 Index.  It actually holds all 500 stocks that are included in the index.


It is considered a Large Cap stock fund with a combination of growth and value.  Since it is basically just an index fund, the annual expense ratio is only .09% (9 Basis Points) making it very cost effective.

As you can see by the chart below, the SPY has done a very good job of matching the performance of the S&P 500 index over the years.  The only difference should be the 9 basis point fee which amounts to less than 1% per decade.

SPDR S&P 500 Versus The S&P 500 Index

As you can see the S&P 500 has been trading in a wide range between 666 and 1450 for the past decade.  These “lost decades” tend to lead to good periods of growth once they finally resolve to the upside.  With all the headwinds the U.S. economy faces it could easily be several more years before we see significant new highs in the SPY.


There is a 2nd S&P 500 Index ETF sponsored by iShares – IVV. It trades a small fraction of the volume of SPY but is still very liquid averaging over 2 million shares per day. IVV started on May 15, 2000 roughly 7 years after SPY. You can see from the chart below that the performance of IVV and SPY has been identical and they both have the same exact expense ratio (9 basis points). So choosing between the two is simply a matter of personal preference, your end results should be the same with either one.

S&P 500 ETF Comparison Between SPY and IVV

Check out the other articles on this site for more S&P 500 based ETF products such as Leveraged, Inverse and Equally Weighted ETFs. There have never been more alternatives for the average investor to participate in the stock market.