Key takeaways
SPY is an index fund that tracks the S&P 500 Index. Investing in it provides exposure to about 500 of the largest U.S. companies.
Investing in SPY offers instant diversification for your portfolio for a low fee, which is an attractive option for passive investors. However, SPY is subject to the same market volatility as any other equity-based investment.
SPY was the first ETF listed in the U.S. and remains the most actively traded ETF in the world.
The SPDR S&P 500 ETF trust, listed on the New York Stock Exchange as SPY, is a popular exchange-traded fund (ETF) that tracks the performance of the S&P 500 index. SPY, which debuted in 1993, was the first ETF listed in the U.S. The fund offers investors exposure to around 500 of the largest companies in the U.S.
Here’s more about how the SPY ETF works and how to invest in it.
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How the SPY ETF works
SPY holds a diversified portfolio of securities that closely match the key risk factors and characteristics of the full S&P 500 index.
Originally introduced in 1993, SPY is managed by State Street Global Advisors, and as of mid-2025, it has $616.1 billion in assets under management and is the most actively traded ETF globally.
The price of one share of SPY is designed to be one-tenth the value of the S&P 500 Index. The ETF has generated an average annual return of more than 10 percent since its inception.
What sectors is the SPY ETF invested in?
The top five sectors in SPY are information technology, financials, consumer discretionary, communication services and health care.
Fund sector allocation
Sector | Weight |
|---|---|
Information technology | 32.76% |
Financials | 14.13% |
Consumer discretionary | 10.40% |
Communication services | 9.69% |
Health care | 9.46% |
Industrials | 8.62% |
Consumer staples | 5.55% |
Energy | 3.00% |
Utilities | 2.40% |
Real estate | 2.06% |
Materials | 1.92% |
Index sector allocation
Sector | Weight |
|---|---|
Information technology | 32.76% |
Financials | 14.13% |
Consumer discretionary | 10.40% |
Communication services | 9.69% |
Health care | 9.46% |
Industrials | 8.62% |
Consumer staples | 5.55% |
Energy | 3.00% |
Utilities | 2.40% |
Real estate | 2.06% |
Materials | 1.92% |
SPY’s holdings
The tables below compare SPY to the S&P Index’s holdings. As you can see, the percentages are closely matched in most cases.
Fund top holdings
Name | Shares held | Weight |
|---|---|---|
NVIDIA Corp | 295,394,977 | 7.13% |
Microsoft Corp | 90,331,712 | 6.97% |
Apple Inc | 181,524,535 | 5.92% |
Amazon.Com Inc | 114,835,986 | 3.97% |
Meta Platforms Inc Class A | 26,385,555 | 2.98% |
Broadcom Inc | 57,142,268 | 2.37% |
Alphabet Inc Cl A | 70,729,666 | 1.95% |
Tesla Inc | 33,770,890 | 1.78% |
Berkshire Hathaway Inc Cl B | 22,284,868 | 1.71% |
Alphabet Inc Cl C | 57,054,166 | 1.58% |
S&P 500 index top holdings
Name | Weight |
|---|---|
NVIDIA Corporation | 7.13% |
Microsoft Corporation | 6.97% |
Apple Inc. | 5.92% |
Amazon.com Inc. | 3.97% |
Meta Platforms Inc Class A | 2.98% |
Broadcom Inc. | 2.37% |
Alphabet Inc. Class A | 1.95% |
Berkshire Hathaway Inc. Class B | 1.71% |
Tesla Inc. | 1.61% |
Alphabet Inc. Class C | 1.58% |
Benefits of the SPY ETF
Many investors turn to index funds for diversification, tax efficiency, low fees and minimal maintenance. SPY offers exposure to more than 500 of the largest stocks in the U.S. all in one fund, which can be much simpler than investing in many individual companies’ stocks.
Risks of the SPY ETF
While SPY is a cost-effective and highly liquid investment option for investors, it’s also subject to the same risks as any other investment in the stock market, including market volatility, and economic and geopolitical risks. The value of equity securities can fluctuate and may decline significantly due to the actions of individual companies and general market and economic conditions.
How to invest in the SPY ETF
Investors can buy and sell shares of SPY or other ETFs or stocks with a brokerage account or a self-directed investment account, such as an IRA. Investors who work with a broker or financial advisor can direct their funds to be invested in SPY.
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Bottom line
The SPY ETF is a cost-effective investment option for investors looking to gain exposure to about 500 large US companies. However, it is also subject to the same risks as any other investment in the stock market, including market volatility, and economic and geopolitical risks. That said, for investors looking to diversify their portfolios, the SPY ETF is a solid option.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
