S&P ETF, S&P 500 Exchange Traded Fund

By: EconomyWatch   Date: 30 July 2009

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EconomyWatch

The core Content Team our economy, industry, investing and personal finance reference articles.

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The S&P 500 is a value-weighted index of the 500 most actively traded large-cap common stocks in the US. The S&P 500 is the second most widely followed large-cap stocks index in the US, after the Dow Jones Industrial Average. As the S&P 500 index is considered the bellwether of the US economy, numerous exchange traded funds (ETFs), mutual funds and pension funds are designed to track its performance.

 

S&P 500: History
 

The S&P 500 index is a product of Standard & Poor's, which traces its origins to the publication of Henry Varnum Poor's History of Railroads and Canals in the United States in 1860. This publication proved to be a precursor of modern stock reporting and analysis. Meanwhile in 1906, the Standard Statistics Bureau was started with an aim to provide financial information on US companies that was unavailable to the public until then. Ten years down the line, the Standard Statistics Bureau expanded its horizon to assign debt ratings to corporate bonds. Over the next several years, the Bureau started assigning ratings to sovereign debt and municipal bond as well.

 

Poor's Publishing and Standard Statistics Bureau merged in 1941 to form the Standard & Poor's Corporation (S&P). The S&P 90 was extended to include 500 stocks, resulting in the creation of the S&P 500 index on March 4, 1957.

 

Among the numerous services rendered by the Standard & Poor’s are:

  • Credit ratings

  • Indices

  • Investment research and data

  • Information and analysis on mutual funds

 

All these services help financial decision makers take informed decisions regarding their investments.

 

The S&P 500 index constitutes of stocks of large, publicly-held companies trading either on the NASDAQ OMX or the NYSE Euronext, the two largest US stock markets. Since the index includes both growth and value stocks, it is widely used as a measure to identify the general level of stock prices. 

 

S&P 500 ETF 

Some of the popular S&P 500 ETFs are:

  • Standard & Poor's 500 Index Depository Receipts:This first and the biggest ETF tracks the S&P 500 index, which is regarded as the standard for measuring the performance of large-cap US stocks.

  • iShares S&P 500: This is Barclays' slightly less expensive version of the Standard & Poor's Depositary Receipts (SPDR). It tracks the S&P 500 index.

  • Standard & Poor's MidCap 400 SPDRs: It tracks the S&P MidCap 400 index. This index measures the performance of mid-size US companies and seamlessly complements the S&P 500.

 


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Most Popular in Exchange Traded Funds

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