Financial Pros’ Top 5 ETFs

What’s the most popular ETF amongst financial professionals…

…you know, the ones in charge of billions of dollars that move the markets.

According to our TrackStar data, it’s the trusty old S&P 500 ETF the SPY.

Not only is it one of the oldest ETFs in the market, it’s the ticker with the highest dollar volume at nearly $30 billion every day.

But before you go rushing into this ETF, let’s make sure you have all the facts.

Key Facts About SPY

• Net assets: $533.9 billion
• 12-month trailing yield: 1.27%
• Inception: January 22, 1993
• Expense ratio: 0.09%
• Number of holdings: 504

As the gold standard, the SPY ETF tracks the components of the S&P 500 weighted index on a daily basis.

With over $530 billion under management, it’s got plenty of power to move every stock it holds.

Two decades ago, you’d find the financials and energy companies in the top 10 holdings.

Today, it’s made up primarily of tech companies, which comprise over 1/3rd of its total weight.

Source: State Street

Overall, technology companies make up nearly a third of the index, while financials are the second largest sector at 12.7%. 

Real estate is the smallest sector at just 2.18%.

Source: State Street

Performance

With it’s rock bottom expenses, the SPY’s performance closely mirrors that of the S&P 500, which has done incredibly well over the years, whether your looking back a month, a year, or even a decade.

Source: State Street

Much of the S&P 500’s and the SPY’s success is thanks to the extraordinary performance of large cap technology companies.

Competition

Unsurprisngly, the top ETF searches by financial pros revolve around major indexes and markets.

Here’s how they compare.

• Invesco QQQ (QQQ): The QQQ is a lot like the SPY, except that it follows the Nasdaq 100 index, which is weighted even more heavily to larger tech companies.
• iShares 20+ Year Treasury Bond ETF (TLT): If you want exposure to the bond market, the TLT holds a basket of longer-dated Treasuies with maturities 20 years or longer.
• SPDR Dow Jones Industrial Average ETF (DIA): Tracking the oldest index in U.S. markets, the DIA follows the Dow Jones Industrial Average 30 stocks.
• SPDR S&P Regional Banking ETF (KRE): The odd ball of the group, the KRE is a subsector index ETF that tracks the daily movement of a basket of regional banking stocks.

While the QQQ has outperformed the other ETFs thanks to its tech heavy weighting, it also comes with more volatility.

Yet, the S&P 500 +100% gain over the last five years is nothing to sneeze at.

Our Opinion 10/10 

With options now expiring daily, plenty of liquidity, and low fees, there’s a reason the SPY is the go-to ETF for traders and investors.

Whether you’re looking to passively invest in the markets or actively trade, there isn’t a better product out there in our opinion.

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