Understanding the SPDR ETF

The SPDR ETF is a mirror of the S&P 500 Depository Receipts, which in turn is a mirror of the S&P 500 index. A depository receipt is an investment that is based on the basket of securities that underlies the investment without being the actual investment. The SPDR ETF, which is referred to as the “spider” ETF, closely tracks the performance of the SPDR index and seeks to mach that return for the investor. SPDRs are comprised of various different indices including the S&P 500, Dow Jones Averages, Russell indices, Morgan Stanley international indices and others. To understand what a SPDR ETF means that you need to understand what an ETF is an how it can be included in your investment portfolio.

About SPDR ETFs

The S&P 500 Depository Receipts exchange traded fund or SPDR ETF trades as a fund similar to any other type of ETFs. The performance of the underlying SPDR index is the basis for the performance of the fund. This performance is net any fees and brokerage commissions that may be charged. These fees are generally lower than those fees associated with a comparable mutual fund since mutual funds are actively managed funds that seek to outperform the market.

SPDRs can be found in both equity based indexes and fixed income securities. There are over 75 individual SPDR ETFs in every investment sector including domestic stocks and bonds and international securities as well as commodity SPDRs. This means that there is a SPDR ETF that is suitable to your investment goals and objectives and finding the right SPDR ETF is based on the investment plan that you create.

Choosing the Appropriate SPDR ETF

The process of choosing the appropriate SPDR ETF is based on constructing a solid investment plan. This plan is based on your financial objectives and goals and sets forth the basis for which SPDR should be included in your investment portfolio. An investor uses this plan as a jumping off point in order to select the most appropriate SPDR that will help to meet their investment objectives and goals.

An investor with a long term investment time horizon of more than 25 years or so may find investing in a growth related SPDR as oppose to an investor who has a time horizon of 5 years that may look for a fixed income SPDR for their portfolio.

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