What Does "Spider" Mean?
Spider (SPDR) is a short form name for a Standard & Poor's depository receipt, an exchange-traded fund (ETF) managed by State Street Global Advisors that tracks the Standard & Poor's 500 index (S&P 500). Each share of an SPDR contains a 10th of the S&P 500 index and trades at roughly a 10th of the dollar-value level of the S&P 500. SPDRs can also refer to the general group of ETFs to which the Standard & Poor's depositary receipt belongs.
Key Takeaways
- "Spider" refers to Standard & Poor's Depository Receipts, or SPDR, which is an exchange-traded fund that tracks its underlying index, the S&P 500.
- The ETF trades at one-tenth of the value of the S&P. IF the S&P is trading at $3,000, SPDR will trade at $300.
- SPDRs are the cornerstone of many investor portfolios.
- Due to the price, the fund is accessible to almost anyone who wishes to invest in the S&P 500 through an ETF.
How Spiders (SPDRs) Work
Spiders are listed under the ticker symbol SPY. By trading like stocks, spiders have continuous liquidity, can be short sold, bought on margin, provide regular dividend payments and incur regular brokerage commissions when traded.
Spiders are used by large institutions and traders as bets on the overall direction of the market. They are also used by individual investors who believe in passive management or index investing. In this respect, spiders compete directly with S&P 500 index funds and provide an alternative to traditional mutual fund investment.
SPDRs can be purchased and sold through a brokerage account, meaning that strategies that use stop-losses and limit orders can be implemented.
SPDRs provide investors with value in much the same way as a mutual fund, but they trade like a common equity. For example, the returns of a SPDR is calculated using net asset value (NAV), just like a fund, which is derived using the aggregate value of the underlying group of investments.
The Origin of SPDRETFs
SPDRsarrived in 1993 after the Securities and Exchange Commission (SEC) issued a 1988 report faulting automated orders for all index stocks for contributing to the "Black Monday" crash of 1987. The report stated that an instrument for trading a basket of stocks at one time could prevent the problem in the future. In response, the AMEX and several other organizations developed the SPY. The original ETF launched with $6.53 million in securities and, after initial difficulty persuading institutions to purchase the product, it soared to $1 billion in three years. The size of the global ETF market at the end of 2023, has exploded to $11.63 trillion in assets.
Examples of SPDR ETFs
Investors can use SPDRs to realize broad diversification to specific portions of the market. For example, the SPDR S&P Dividend ETF is an investment vehicle that seeks to provide investment results that track the total return performance of the S&P High Yield Dividend Aristocrats Index. This means that the SPDR S&P Dividend ETF indexes dividend-paying stocks that are a part of the S&P 500. The ETF is made up of a total of 136 companies and tracks performance through its NAV, which is communicated as a price per share.
However, this is not the only SPDR that an investor can use to realize a diversified investment in the S&P 500. Using another real-world example, investors can invest in SPDR S&P Regional Banking ETF, which is an investment vehicle that reflects the performance of companies within the S&P 500 that conduct business as regional banks or thrifts. Specifically, the ETF seeks to provide results that match to the total return of the S&P Regional Banks Select Industry Index. The ETF is comprised of 140 companies in the S&P and also derives its value with its NAV, disseminated as a price per share.
FAQs
Spiders (SPDR) are tradable ETFs that closely follow the performance of the benchmark S&P 500 or sectors within the index. An exchange-traded fund (ETF) is a basket of securities that tracks or seeks to outperform an underlying index. ETFs can contain investments such as stocks and bonds.
What is an example of SPDR? ›
For example, one of the largest SPDR ETFs is the SPDR Gold Trust (GLD), which is designed to track the spot price of gold. Other SPDR ETFs track different stock indices, such as the S&P 500, Dow Jones Industrial Average, Nasdaq Composite and Russell 2000.
How does SPDR work? ›
SPDRs provide investors with value in much the same way as a mutual fund, but they trade like a common equity. For example, the returns of a SPDR is calculated using net asset value (NAV), just like a fund, which is derived using the aggregate value of the underlying group of investments.
Who invented SPDR? ›
History of SPDR
The SPDR's design is attributed to two AMEX executives, namely Steven Bloom and Nathan Most. Interestingly, SPDR came into existence out of the 1987 severe market crash known as Black Monday.
Where is SPDR from? ›
History. The Standard & Poor's Depositary Receipts were launched by Boston asset manager State Street Global Advisors (SSgA) on January 22, 1993, as the first exchange-traded fund in the United States (preceded by the short-lived Index Participation Shares that launched in 1989); and are part of the SPDRs ETF chain.
What stocks make up SPDR? ›
SPDR S&P 500 ETF Trust (SPY)
- MSFT. Microsoft Corporation 6.84%
- AAPL. Apple Inc. 5.85%
- NVDA. NVIDIA Corporation 5.05%
- AMZN. Amazon.com, Inc. 3.78%
- GOOGL. Alphabet Inc. 2.27%
- META. Meta Platforms, Inc. 2.24%
- GOOG. Alphabet Inc. 1.92%
- BRK-B. Berkshire Hathaway Inc. 1.71%
Overview of the S&P sectors
- Information Technology. The information technology – IT – sector consists of companies that develop or distribute technological items or services, and includes internet companies. ...
- Health Care. ...
- Financials. ...
- Consumer Discretionary. ...
- Communication Services. ...
- Industrials. ...
- Consumer Staples. ...
- Energy.
The term spider is the commonly-used expression to describe the Standard & Poor's Depository Receipt (SPDR). This type of investment vehicle is an exchange-traded fund (ETF). You can think of an ETF as a basket of securities (like a mutual fund) that trades like a stock.
What's the difference between an ETF and a spider? ›
Key Takeaways. SPDR exchange traded funds are issued by State Street Global Advisors and are designed to track indexes or benchmarks. SPDR 500 Trust, sometimes called spiders, holds the same stocks as the S&P 500 Index. ETFs differ from mutual funds in that shares are traded on the exchanges like shares of stock.
How does SPDR gold Trust work? ›
The NAV of the Trust is determined by the Trustee each day that the NYSE Arca is open for regular trading. The NAV of the Trust is calculated based on the total ounces of gold owned by the Trust valued at the LBMA Gold Price PM of that day plus any cash held by the Trust less accrued expenses.
The name is an acronym for the first member of the family, the Standard & Poor's Depositary Receipts, now the SPDR S&P 500 Trust ETF, which is designed to track the S&P 500 stock market index. For a long time, the SPDR S&P 500 was the largest ETF in the world.
What is the difference between SPDR and SPY? ›
The Standard and Poor Depositary Receipts (SPDR) S&P 500 ETF is an exchange-traded fund that tracks the S&P 500 stock market index. The SPDR S&P 500 ETF is listed on the New York Stock Exchange and trades under the ticker symbol SPY. The SPY's price tracks the S&P 500 index.
Is SPDR worth it? ›
The SPDR Portfolio S&P 500 Growth ETF offers investors a good mix of growth stocks with a rock-bottom expense ratio of only 0.04%, meaning investors only pay $4 annually for every $10,000 invested in the fund.
Who is the issuer of SPDR? ›
S&P®, SPDR®, S&P 500®,US 500 and the 500 are trademarks of Standard & Poor's Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and has been licensed for use by S&P Dow Jones Indices; and these trademarks have been licensed for use by S&P DJI and ...
Is SPDR active or passive? ›
The majority of SPDR ETFs are passively managed funds that track underlying indexes.
Is SPDR a bond? ›
SPDR High Yield Bond ETFs give portfolios exposure to the low end of the credit quality spectrum. These bonds are defined as securities with credit ratings of less than 'BB'.
What is the difference between an ETF and a SPDR? ›
Key Takeaways. SPDR exchange traded funds are issued by State Street Global Advisors and are designed to track indexes or benchmarks. SPDR 500 Trust, sometimes called spiders, holds the same stocks as the S&P 500 Index. ETFs differ from mutual funds in that shares are traded on the exchanges like shares of stock.
How many SPDR funds are there? ›
With 138 ETFs traded on the U.S. markets, SPDR ETFs have total assets under management of $1,318.10B. The average expense ratio is 0.27%. SPDR ETFs can be found in the following asset classes: Fixed Income.
What is the symbol for SPDR? ›
The SPDR® S&P 500® ETF is listed on the New York Stock Exchange (NYSE Arca) under ticker symbol SPY.
Is SPDR S&P 500 a mutual fund? ›
The SPDR S&P 500 ETF Trust (SPY) is a widely utilized exchange-traded fund (ETF) that tracks the S&P 500. ETFs are a type of pooled investment security that operate much like a mutual fund.
