SPLG vs SPY
SPLG vs SPY are both ETFs that were created by SPDR State Street Global Advisors; a large asset management firm. Although both SPLG and SPY were created by the same firm and have many similarities amongst them, there are some key differences between them.
Here, we will analyze the differences in the holdings of the SPLG vs SPY and then delve deeper into some of the other aspects of the ETFs - such as risk, performance, and more - which result from these differences.
SPLG vs SPY: SPLG Portfolio
The SPLG, or SPDR Portfolio S&P 500 ETF, attempts to track the performance of the S&P 500 index, like many other ETFs. It is designed to provide diversity above all, in an attempt to lower overall volatility.
Because it tracks some of the largest companies in the US, it is almost guaranteed to be profitable outside of an economic recession, making it a 'safe' bet for most beginner traders, or those wishing to diversify their portfolio for the purpose of offsetting slightly higher risk trades.
The largest percentage holding at the time of writing this article in August 2022 in the SPLG is Apple Inc. (APPL) at 6.76%.
SPLG vs SPY: SPY Portfolio
The SPY ETF, or SPDR S&P 500 ETF Trust, attempts to track the performance of the Fortune 500 S&P Index. It is very similar to the SPLG in that it has holdings in some of the largest companies in the world, and is incredibly diverse.
This also means that it is suitable for long term investing due to the fact that it is a rather stable asset, with continuous growth in most market conditions.
Its largest percentage holdings is also in Apple Inc. at 6.76%. In fact, a comparison of the top ten holdings of the SPLG vs SPY looks almost identical, as can be seen in the table below.
SPLG vs SPY: Portfolio Differences
The biggest difference in the portfolio of SPLG vs SPY is the size. SPY is a lot older, and a lot bigger, than SPLG with more than $374 billion in assets, while SPLG has almost $11 billion in assets.
Although they will still be similar in many regards, this difference in size will cause some difference regarding cost etc.
SPLG vs SPY: Analysis
SPLG vs SPY: Risk
Risk is an important factor to consider before investing in anything. The key to being a successful trader is risk management. Total risk will differ depending on the type of trader you are, and your strategy. ETFs, in general, are a great way to minimize risk because they are already diverse, but there is always some risk associated with any trade.
A great way to measure risk is in volatility. The implied volatility of SPY for August 2022 is approximately 0.18%. This is very similar, although slightly lower than the implied volatility of SPLG at 0.183%.
This is a relatively good volatility for both, as the market volatility, as implied by the VOO, is 0.183%, as can be seen in the graph below.
This means that, although there is a potential lower risk in investing in the SPY, both the SPLG and SPY are of no higher risk than the entire market at this time, and generally make good investments in terms of risk.
SPLG vs SPY: Performance
The overall performance of the SPLG vs SPY has been very similar over the past few years, which is to be expected considering they both track similar companies. Below is a graph illustrating the percentage growth of SPY (blue) and SPLG (Orange) which illustrates this well.
Over the past five years, SPLG has experienced overall growth of 69.88% while SPY has experienced growth of 69.37%.
SPLG vs SPY: Cost
The SPLG vs SPY cost is an important aspect of the ETFs to take into account before deciding which is the best for you. This is because, like most other ETFs, they are considered ideal for long-term positions. This means that even a small expense ratio can cost you a great deal over time.
In the case of cost, SPLG has an expense ratio of 0.03%, which means that for every $100 that you own, it will cost you 3 cents per annum. It is a third of the cost of the more expensive SPY, which has an expense ratio of 0.09%, or 9 cents per $100 per annum.
SPLG vs SPY: Conclusion
SPLG vs SPY are very similar due to their almost identical composition of holdings. Their returns over the past few years have also proven to be very similar. However, there is a large disparity in cost.
Although it may not seem like a 0.09% expense ratio is a very big number, it is three times that of SPLG at 0.03%. This can make a big difference, especially if you are investing large sums of money.
However, the same can be said for the small increase in risk.
Assuming that you are not a retail trader who is dealing with millions, it is recommended to go with the SPLG, even though it has a slightly higher volatility.
It is also significantly cheaper than SPY, at only $48.62, as opposed to $413.47, which makes it accessible to traders without as much capital.
However, this may not be the case for you. It is important to consider your portfolio size and whether the additional risk is worth it. Remember, past success is no guarantee of the future. Trade at your own risk.