The world’s largest and the ultra-popular large cap ETF, SPDR S&P 500 ETF Trust SPY, has been enjoying its strong asset accumulation on the completion of its 25th anniversary. This is because it has become the first ETF with $300 billion in AUM. Though SPY’s inception date is Jan 22, 1993, it officially debuted on the American Stock Exchange on Jan 29, 1993.
Inside The ETF
SPY tracks the S&P 500 index and holds 505 stocks in its basket, with each security holding no more than 3.62%. This suggests a nice balance across each security and prevents heavy concentration.
About one-fourth of the portfolio is tilted toward the information technology sector, which has fully emerged from the burst of the dot-com bubble and is flying higher in the current bullish market. Moreover, financials, health care, consumer discretionary and industrials, each of which accounts for a double-digit exposure, are also performing remarkably well.
The ETF charges 9 bps in fees per year from investors and trades in heavy volume of 71.6 million shares a day on average. This ensures higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors.
Factors Driving SPY
The U.S. stock market is in the midst of the second-longest bull run in history. Encouraging domestic and international fundamentals as well as better-than-expected corporate earnings are the major catalysts. This, coupled with Trump’s pro-growth agenda aimed at accelerating economic growth, reducing regulation, increasing spending, slashing taxes, and boosting jobs and corporate profits, are bolstering optimism in the economy.
Since Trump’s win, the stock market rally has been the fourth largest since 1936, according to Goldman Sachs. Per Sam Stovall of CFRA Research, the S&P 500 rally during Trump’s first year is the third best since World War II, behind only President George H. W. Bush and President John F. Kennedy.
Further, a combination of other factors like rise in oil prices, a weak dollar and rounds of upbeat global economic data have bolstered the appetite for riskier assets in recent months. Good news flowing despite the global trade fears, political instability in Washington and geopolitical tension.
As a result, SPY generated more than 545% returns over the past 25 years and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Though most of the stocks in the fund’s portfolio have delivered astounding returns during this time period, a few were the real stars. Below, we have highlighted the 25 best-performing stocks in the ETF over the past 25 years:
