Last updated on April 24th, 2022 , 10:15 am
In 2022, State Street Corporation currently offers more than 130 ETFs (exchange-traded funds). Generally speaking, ETFs are cheaper and more liquid than mutual funds.
The most popular of State Street’s ETFs is the SPDR S&P 500 ETF Trust, SPY.
The SPY ETF uses the S&P 500 Market Index as its benchmark. SPY is the largest and most liquid exchange-traded product (ETP) in the entire world.
The popularity of SPY led State Street to create numerous S&P index fund-tracking spinoffs. Some of these funds include:
- SPYG: SPDR Portfolio S&P 500 Growth ETF
- SPYD: SPDR Portfolio S&P 500 High Dividend ETF
- SPYV: SPDR Portfolio S&P 500 Value ETF
- SDY: SPDR S&P Dividend ETF
- SPDR: SPDR S&P Biotech ETF
- SPLG: SPDR Portfolio S&P 500 ETF
In this article, projectfinance will compare the performance and characteristics of four of these funds; SPY, SPYG, SPYD, and SPYV. Let’s look at the takeaways, then get started with a data-table comparison!
TAKEAWAYS
- State Street’s SPY, SPYG, SPYD ad SPYV all track different variations of the S&P 500 stock market index.
- SPY is the oldest and most popular straight S&P 500 tracking ETF in the world.
- SPYG tracks 240 growth stocks within the S&P 500.
- SPYD tracks only 79 stocks. This ETF has strict criteria for entry, favoring stocks with high dividends.
- SPYV track 447 stocks in the S&P 500, all of which are high value. This “value” is determined by factors such as book value to price ratio.
- SPYG experiences the most volatility of all the funds but also has the most upside potential.
- Though SPYD offers a high dividend, it contains many energy stocks, which are known for their volatility.
| SPY | SPYG | SPYD | SPYV | |
|---|---|---|---|---|
|
Fund Issuer: |
State Street |
State Street |
State Street |
State Street |
|
Fund Name: |
SPDR® S&P 500® ETF Trust |
SPDR® Portfolio S&P 500® Growth ETF
|
SPDR® Portfolio S&P 500® High Dividend ETF
|
SPDR® Portfolio S&P 500® Value ETF |
|
Fund Category: |
Large-Cap Blend |
Large-Cap Growth |
Large-Cap Value |
Large-Cap Value |
|
Underlying Index: |
||||
|
Expense Ratio (fees): |
0.09% |
0.04%. |
0.07% |
0.04% |
|
Number of Holdings: |
505 |
240 |
79 |
447 |
|
1 Year Return: |
+15.47% |
+18.20% |
+18.60% |
+12.45% |
|
Morningstar Rating: |
☆☆☆☆☆ |
☆☆☆☆☆ |
☆ |
☆☆ |
|
Fund Structure: |
UIT |
ETF |
ETF |
ETF |
|
Dividend: (30 Day SEC Yield) |
1.27% |
0.70% |
3.62% |
1.93% |
What Is the SPY ETF?
- SPY has a dividend yield of 1.27%
- The expense ratio (total fees) of SPY is 0.09%
- State Street’s SPY exchange-traded fund is the first ETF to be issued.
- SPY tracks the S&P 500 Index.
- Because of its age (inception date 1993), SPY is structured as a UIT (unit investment trust), though it trades just like an ETF.
- SPY is currently the most widely traded investment product in the world.
State Street’s SPDR® S&P 500 ETF (Ticker SPY) was the first exchange-traded product in the world to be issued. Here is how State Street describes its fund:
SPY is a straightforward ETF. This low-cost fund tracks the S&P 500 Index (SPX), which is the most followed index in the world. Here are a few quick facts about SPX:
- The S&P 500 Index contains the 500 largest US companies by market capitalization.
- The S&P 500 is a float-weighted index, which means larger companies have greater weight than smaller companies.
- The S&P 500 index is generally considered to be the best gauge for the health of US stocks.
- The S&P 500 index can not be directly invested in as indices do not offer shares.
What does the SPY ETF Hold?
The S&P 500 is a well-diversified index containing large-cap stocks from numerous sectors.
The below image was taken from the factsheet of State Street Global Advisors, the issuer of the SPY ETF:
As we can see, information technology accounts for a large segment of the S&P 500 index. Health Care and Consumer Discretionary stocks also have heavyweight in this index, but nowhere as close as tech.
The IT (tech) sector is dominated by FAANG Stocks, which represent Meta (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOGL).
So what percentage of the SPY ETF is invested in these behemoths? Let’s take a look at the top ten holdings in this fund to find out!
SPY Top Ten Stock Holdings
Image from ssga.com
What Is the SPYG ETF?
- SPYG has a dividend yield of 0.70%.
- The expense ratio (total fees) of SPYG is 0.04%.
- SPYG tracks the S&P 500 Growth Index.
- Growth stocks have more risk than balanced or value stocks.
State Street’s SPDR® Portfolio S&P 500® Growth ETF (SPYG) tracks only part of the S&P 500 index. Which part? As you can probably guess from its name, this ETF singles out only the growth companies within the S&P 500 Index.
Growth companies tend to be more volatile than value companies. In bullish markets, growth companies tend to outperform the market while these stocks typically underperform the market in bearish markets. Here is how State Street describes its fund:
So what companies does SPYG track? Let’s look under the hood to find out!
SPYG Sectors
Image from ssga.com
Many information technology stocks fall under the growth sector. Because of this, SPYG has huge exposure to IT stocks – 43.13% to be exact. Compare that to SPY’s IT exposure, which is still lofty at 26.75%.
So what stocks does SPYG contain?
As we can see below, SPYG has a lot in common with SPY, with Apple (AAPL), Microsoft Corporation (MSFT) Amazon (AMZN, Tesla Inc. (TSLA), Alphabet Inc. (GOOGL), and NVIDIA (NVDA) all representing the top positions.
However, SPYG places a much greater weight on these IT stocks in relation to SPY.
SPYG Top Ten Stock Holdings
Image from ssga.com
What Is the SPYD ETF?
- SPYD has a high dividend yield of 3.62%.
- The expense ratio (total fees) of SPYD is 0.07%.
- SPYD tracks the S&P 500 High Dividend Index.
- High-dividend paying stock tends to be more value-oriented.
State Street’s SPDR Portfolio S&P 500 High Dividend ETF (SPYD) is a great fund for income-thirsty investors.
This ETF isolates 80 high dividend-yielding companies within the S&P 500 Index. The result is a dividend yield of 3.62%. This yield is higher than SPY’s dividend yield of 1.27% and far surpasses SPYG’s dividend yield of 0.70%.
The downside tradeoff of high dividend-paying stocks usually comes in the form of long-term underperformance. SPYD has vastly underperformed SPY over the past five years, as can be seen below.
SPY vs SPYD: 5 Year Chart
High dividend-paying companies tend to be less volatile than growth companies. In bullish markets, these companies tend to underperform the market while these stocks typically outperform the market in bearish markets.
Let’s next check out how State Street describes its high dividend-paying fund.
Our first two ETFs (SPY & SPYG) were dominated by information technology stocks. SPYD, on the other hand, places a relatively minuscule weight on tech equities.
As we can see above, IT stocks account for only 2.45% of SPYD’s weighting. This fund favors utilities, energy, financials, consumer staples, and health care stocks. These stocks tend to be more financially stable, relying on steady income and revenue for steady dividend streams.
Let’s next see what stocks in particular the SPYD ETF favors.
SPYD Top Ten Stock Holdings
Image from ssga.com
As we can see, big energy stocks dominate the top ten holdings of SPYD. Let’s take a look at the dividend yields of a few of these companies to see why:
- Valero Energy Corporation (VLO): 3.63% Yield
- Chevron Corporation (CVX): 3.37% Yield
- Sempra Energy (SRE): 2.67% Yield
What Is the SPYV ETF?
- SPYV has a dividend yield of 1.96%.
- The expense ratio (total fees) of SPYV is 0.04%.
- SPYD tracks the S&P 500 Value Index.
State Street’s SPDR Portfolio S&P 500 Value ETF (SPYV) contains the stocks within the S&P 500 index that are most value forward. A high-value stock is determined by three factors:
- Book value to price ratio.
- Earnings to price ratio.
- Sales to price ratio
Of the 504 the stock in the S&P 500 index (remember that some companies like Google issue two classes of stock – class a and class c), 447 make the cut to be included in this ETF. This is in comparison to SPYD, which only includes 79 stocks.
High dividend-paying stocks are not synonymous with high-value stocks.
As we will soon learn, SPYV is concentrated in far less volatile stocks than SPYD, with names such as Berkshire Hathaway Inc, Johnson & Johnson, and Procter & Gamble Company topping its holdings.
Let’s do a quick 5-year comparison of SPYD and SPYV, then move on to examine the holdings and top stocks within SPYV.
SPYD vs SPYV: 5 Year Chart
SPYV Top Ten Stock Holdings
Image from ssga.com
SPY vs SPYG vs SPYD vs SPYV: Performance
Let’s conclude the article by comparing the historical price performance of our four State Street ETFs.
The below two charts compare the three-year and five-year growth of $1,000 invested in our various ETFs. To enlarge the images, simply click on them!
SPY vs SPYG vs SPYD vs SPYV: 3 Year Chart
Image from ssga.com
SPY vs SPYG vs SPYD vs SPYV: 5 Year Chart
Image from ssga.com
SPY vs SPYG vs SPYD vs SPYV: Which is Best?
Every ETF on our list comes with different levels of risk. Generally speaking, SPYG has the most risk and SPYV has the least risk.
SPY can work for investors of all ages. Its great diversification and high liquidity (its assets under management are over 4B) make this fund very versatile.
SPYG contains growth stocks, which can be quite volatile during stock market downturns.
Though SPYD does indeed have a very high dividend, its energy heavy portfolio can prove to be ballast on long-term term returns.
SPYG is more suitable for younger investors, while SPYD and SPYV are best suited for older investors because of their relative price stability.
☆ Worth noting here are some of State Street’s competitors: Vanguard’s VOO ETF tracks the S&P 500 as well, but it does so for a lower expense ratio of 0.04%.
Have a question or comment? Drop a line below and I’ll make sure to reach out to you!
FAQs
SPY track the S&P 500 index. SPYG tracks only the growth companies within the S&P 500 index. The SPYG ETF has 240 stocks within it while the S&P 500 currently has 505. SPYG is more volatile than SPY.
SPYG, as determined by Morningstar’s 5 star rating, is currently a great investment for investors with a long-term time horizon looking for exposure to large-cap growth stocks.
Historically, SPYG has significantly outperformed SPY. However, SPYG will most likely underperform SPY in the next bear market. This is because SPYG is comprised of high beta “growth” companies, which are typically in the volatile “Information Technology” sector.
Is there any advantage to buying SPY over VOO? It looks like they are both identical S&P 500 tracking ETFs.
Thanks for the comment Léo!
SPY is technically a UIT while VOO is an ETF. What difference does this make to us? None! They both mirror the S&P 500 index. However, VOO does so for a low fee of 0.04%. That’s half SPYs fee of 0.09%! VOO wins every time here.
Happy investing!