The S&P 500 is a market-capitalization-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 United States, 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), Meta Platforms Inc. (FB), and Alphabet Inc. (GOOGL).
The S&P 500 was the benchmark of the first index fund and the first exchange-traded fund (ETF). An S&P 500 ETF is an inexpensive way for investors to gain diversified exposure to the U.S. stock market. The benchmark has been unusually volatile during the past two years amid the coronavirus pandemic, massive disruptions in the global economy, and Russia’s military invasion of Ukraine.
Key Takeaways
There are four ETFs tracking the S&P 500 that trade in the United States, excluding inverse and leveraged funds. The S&P 500 has provided a total return of 15.9% over the past 12 months, as of March 3, 2022. 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 among 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 ETF Database (ETFdb.com) and as of March 3, 2022.
S&P 500 ETF with the Lowest Fees: iShares Core S&P 500 ETF (IVV) (Tie)
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 One-Year: 15.9%
Annual Dividend Yield: 1.25%Three-Month Average Daily Volume: 8,394,564Assets Under Management: $318.1 billionInception Date: May 15, 2000Issuer: BlackRock Financial Management
S&P 500 ETF with the Lowest Fees: SPDR Portfolio S&P 500 ETF (SPLG) (Tie)
Expense Ratio: 0.03%Performance Over One-Year: 15.9%
Annual Dividend Yield: 1.24%Three-Month Average Daily Volume: 5,726,436Assets Under Management: $13.9 billionInception Date: Nov. 8, 2005Issuer: State Street
S&P 500 ETF with the Lowest Fees: Vanguard S&P 500 ETF (VOO) (Tie)
Expense Ratio: 0.03%Performance Over One-Year: 15.8%
Annual Dividend Yield: 1.24%Three-Month Average Daily Volume: 8,665,201Assets Under Management: $273.2 billionInception Date: Sept. 7, 2010Issuer: Vanguard
Most Liquid S&P 500 ETF: SPDR S&P 500 ETF (SPY)
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.
Expense Ratio: 0.09%Performance Over One-Year: 15.8%Annual Dividend Yield: 1.22%Three-Month Average Daily Volume: 109,890,144Assets Under Management: $396.5 billionInception Date: Jan. 22, 1993Issuer: State Street
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