What every ASX investor should know about the SPY ETF

The Australian ETF industry seems to be growing faster by the day, and one of the ETFs you might have your eye is the SPDR S&P 500 Trust ETF (ASX: SPY). In this article, we’ll provide a quick review of the SPY ETF.

1. Exposure

The SPDR SPY ETF is the oldest ETF in the world and provides exposure to the 500 largest US-listed shares. These 500 shares represent approximately 80% of the total market capitalisation of the US stock market.

2. Funds under management (FUM)

The SPDR SPY ETF had $39.97 million of money invested when we last pulled the monthly numbers. With a funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small.

We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). This is because if an ETF is too small, it may not be sustainable for an ETF issuer/provider, such as SPDR, to continue to operate it.

That said, there are exceptions to this rule of thumb, especially if the ETF issuer is committed to growing the ETF’s FUM to the point where it becomes profitable.

3. Management fees & costs matter

SPDR charges investors a yearly management fee of 0.09% for the SPY ETF. This means that if you invested $2,000 in SPY for a full year, you could expect to pay management fees of around $1.80.

For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.51% or around $10.20 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.

What now?

These are just some of the considerations or factors you would need to consider when weighing up the SPY ETF. If you’re looking to do some further digging, be sure to read our SPDR SPY report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs. You can filter the results according to sector, issuer, size, and more.

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Disclaimer: Any information contained in this article is limited to general financial advice/information only. The information should not be relied upon because it has not taken into account your specific needs, goals or objectives. Please, consult a licenced and trusted financial adviser before acting on the information. Past performance is no guarantee of future performance. Nothing in this article should be considered a guarantee. Investing is risky and can result in capital loss. By reading this website, you acknowledge this warning and agree to our terms & conditions available here. This article is authorised by Owen Raszkiewicz of The Rask Group Pty Ltd.


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