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The S&P 500 is a market-cap-weighted index of 505 large-cap U.S. stocks, representing approximately 80% of the market value of the U.S. stock market. Often synonymous with “the market” in the U.S., the S&P 500 is the closest thing to a default U.S. stock index. Its largest components by weight are mega-cap stocks such as Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), class A shares of Facebook Inc. (FB), and class A shares of Alphabet Inc. (GOOGL). The S&P 500 was the benchmark of the first index fund, and the first ETF. An S&P 500 ETF is an inexpensive way for investors to gain diversified exposure to the U.S. stock market, though it has been unusually volatile in the past year amid the coronavirus pandemic and massive disruptions in the global economy.
Key Takeaways
- The S&P 500 is a market-cap-weighted index of 505 large-cap U.S. stocks.
- The index has a 38.8% trailing 1-year total return.
- The S&P 500 ETFs with the lowest fees are SPLG, VOO, and IVV.
- The highest-liquidity ETF is SPY.
There are 4 ETFs tracking the S&P 500 that trade in the U.S., excluding inverse and leveraged funds and those with under $50 million in assets under management (AUM). The S&P 500 has provided a total return of 38.8% over the past 12 months, as of June 2, 2021. Below, we look at the least expensive S&P 500 ETFs for buy-and-hold investing and the most liquid one for more active traders. There is a three-way tie between the least expensive funds, an indication of just how intense the price war is as ETF issuers compete to both retain and add investors. All numbers below are from ETFdb.com and as of June 2, 2021.
Because index-tracking ETFs follow the performance of the S&P 500 index, one of the most important determinants of long-term returns is how much a fund charges in fees.
- Expense Ratio: 0.03%
- Performance over 1-Year: 38.8%
- Annual Dividend Yield: 1.36%
- 3-Month Average Daily Volume: 3,013,303
- Assets Under Management: $10.3 billion
- Inception Date: Nov. 8, 2005
- Issuer: State Street
- Expense Ratio: 0.03
- Performance over 1-Year: 38.8%
- Annual Dividend Yield: 1.40%
- 3-Month Average Daily Volume: 4,445,600
- Assets Under Management: $225.5 billion
- Inception Date: Sept. 7, 2010
- Issuer: Vanguard
- Expense Ratio: 0.03%
- Performance over 1-Year: 38.7%
- Annual Dividend Yield: 1.35%
- 3-Month Average Daily Volume: 4,617,949
- Assets Under Management: $279.9 billion
- Inception Date: May 15, 2000
- Issuer: BlackRock Financial Management
Liquidity indicates how easy it will be to trade an ETF, with higher liquidity generally translating to lower trading costs. Trading costs are not a big concern with people who want to hold ETFs long term. But if you’re interested in trading ETFs frequently, then it’s important to look for high-liquidity funds to minimize trading costs.
- 3-Month Average Daily Volume: 83,221,152
- Performance over 1-Year: 38.6%
- Expense Ratio: 0.09%
- Annual Dividend Yield: 1.33%
- Assets Under Management: $361.2 billion
- Inception Date: Jan. 22, 1993
- Issuer: State Street
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