When it comes to investing in the S&P 500, two prominent exchange-traded funds (ETFs) often come to mind: the SPDR S&P 500 ETF Trust (SPY) and the SPDR Portfolio S&P 500 ETF (SPLG). Although both funds aim to track the performance of the S&P 500 Index, they cater to different investor needs—one prioritizes long-term cost efficiency, while the other emphasizes liquidity for quick trades. In this blog post, we'll explore how these two ETFs compare, helping you decide which may be the right fit for your investment strategy.
Key Differences Between SPY and SPLG
| Metric | SPLG | SPY |
|---|---|---|
| Issuer | SPDR | SPDR |
| Expense ratio | 0.02% | 0.09% |
| 1-yr return (as of Dec 2025) | 14.27% | 14.18% |
| Dividend yield | 1.1% | 1.1% |
| Beta | 1.00 | 1.00 |
| AUM | $95.7 billion | $695.8 billion |
Cost Efficiency vs. Liquidity
One of the most significant distinctions between SPLG and SPY lies in their expense ratios. SPLG boasts a lower expense ratio of 0.02%, making it a more affordable option for long-term investors. This cost efficiency can add up over the years, allowing more of your investment to benefit from compounding growth.
On the other hand, SPY, with its higher expense ratio of 0.09%, stands out due to its enormous scale and trading liquidity. With over $695 billion in assets, SPY offers unparalleled liquidity, making it the go-to option for investors who prioritize quick execution during volatile market conditions.
Performance Metrics
Both funds provide similar performance levels, as indicated by their nearly identical 1-year returns. For instance, SPLG returned 14.27% while SPY returned 14.18%, demonstrating that both funds can effectively mirror the S&P 500’s performance.
Portfolio Composition
Both SPY and SPLG primarily invest in large-cap U.S. stocks, ensuring exposure to essential sectors such as Technology, Financial Services, and Communication Services. For example, SPY’s top holdings include:
- Nvidia (NASDAQ: NVDA) - 7.25%
- Apple (NASDAQ: AAPL) - 7.02%
- Microsoft (NASDAQ: MSFT) - 6.16%
Meanwhile, SPLG's largest positions are very similar:
- Nvidia (NASDAQ: NVDA) - 8.34%
- Microsoft (NASDAQ: MSFT) - 6.85%
- Apple (NASDAQ: AAPL) - 6.79%
Which ETF Is Right for You?
Long-Term Investing: Choose SPLG
If your investment strategy focuses on cost efficiency and you plan to hold your assets for a long time, then SPLG may be the better choice. The lower expense ratio can make a significant difference over time, allowing your investments to grow more effectively.
Active Trading: Opt for SPY
Conversely, if you frequently engage in trading and require quick execution, SPY's liquidity can offer a crucial advantage. The fund's vast trading volume ensures you can buy and sell shares efficiently, especially during periods of market volatility.
Conclusion
Both SPLG and SPY provide excellent exposure to the S&P 500, but they cater to different types of investors. SPLG favors patience and long-term growth, while SPY suits those who prioritize immediate execution and trading flexibility. The decision ultimately comes down to whether you value cost efficiency or liquidity more in your investment strategy.
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