Getting exposure to the International shares sector has never been easier thanks to ASX ETFs like the SPDR S&P 500 Trust ETF (ASX: SPY). That said, no matter how easy it seems to be, we think it’s still important to do your own ETF review.
How the SPY ETF could be used in portfolios
The SPDR SPY ETF is the oldest ETF in the world and provides exposure to the 500 largest US-listed shares. These 500 shares represent approximately 80% of the total market capitalisation of the US stock market.
The SPY ETF is yet to reach our FUM target
The SPDR SPY ETF had $54.94 million of money invested when we last pulled the monthly numbers. With a funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small.
We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). This is because if an ETF is too small, it may not be sustainable for an ETF issuer/provider, such as SPDR, to continue to operate it.
That said, there are exceptions to this rule of thumb, especially if the ETF issuer is committed to growing the ETF’s FUM to the point where it becomes profitable.
SPY’s fees & costs explained
SPDR charges investors a yearly management fee of 0.09% for the SPY ETF. This means that if you invested $2,000 in SPY for a full year, you could expect to pay management fees of around $1.80.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Bottom line
This is just a quick overview of the SPY ETF. Before ‘testing the depth of water with both feet’ so to speak, be sure to read the SPY ETF’s Product Disclosure Statement (PDS), available on the SPDR website, or speak to your financial adviser. For another handy resource, take a look at our SPDR SPY report. You can also use our complete list of ASX ETFs to search for a few different ETFs in the sector and conduct a side-by-side comparison using everything you’ve learned here.
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