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The SPDR Trust Series I (NYSE: SPY) is an exchange traded fund (ETF) that tracks the performance of the S&P 500 index. The fund is managed by the State Street Global Advisors and is traded on the New York Stock Exchange. Shares in the fund can be bought through any licensed Series 6 stock broker.
Each unit (share) of the fund is priced to reflect 1/10 of the value of the S&P 500 index. The shares trade continuously on the market. They pay the aggregate dividend of the companies in the S&P 500 index.
The acronym SPDR stands for Standard and Poor's Depository Receipt.
[edit] S&P 500 Index
The Standard and Poors 500 Index is considered representative of the overall U.S. stock market. It consists of 500 companies in 26 sectors to cover the bulk of American business. The value of each company in the index is proportional to its relative market capitalization.
[edit] Investment value of SPY shares
- SPY can be used as a low-cost passive investment for those who want to track the overall market and believe active management rarely beats the indexes. Expenses of 0.10% make SPDRs cost efficient.
- Institutional and individual investors and traders can use SPY to speculate on the direction of the overall market. SPY shares can be bought on margin and sold short.
- SPY has options traded at 1 point increments. SPY options have large open interest and narrow spreads for most strike prices.
[edit] References
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