The SPY ETF is the oldest surviving and most widely known ETF that tracks the S&P 500 Index. The SPY is a well-diversified basket of stocks that allocates its fund into multiple sectors and is extremely popular among both day traders and hedge funds because it is so actively traded. The S&P 500 index is one of the most recognized stock market benchmarks in the world and SPY tracks it very well.

SPY Annual Performance
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
15.06% 1.89% 15.99% 32.31% 13.46% 1.25% 12.00% 21.70% -4.56% 31.22%

The managers of the fund buy and sell certain stocks to align their holdings with the S&P 500 index. When you buy a share of SPY, you’re buying a unit of the current holdings, which represents a small portion of each stock on the S&P 500 index.

Investors buy SPY hoping that the holdings within the fund—the stocks of the S&P 500 index—will rise. This allows them to sell their SPY units at a higher price than what they paid. If the holdings within the fund fall, the value of each unit/share of SPY will fall as well.

ETF Expense Ratio 10yr Performance
VOO 0.03% 8.26%
IVV 0.04% 11.90%
SPY 0.09% 11.85%