spider etf'

[islefan39]

I just wanted to see people on here thought about investing in the spider etfs. It looks like a good way to spread investments over the whole S&P, Does anyone hold these or have any opinions?

[dh1989]

You are referring to SPDRs - Standard and Poors Depository Receipts. My only experience with them is with XLE - the energy sector SPDR. You are basically breaking the S&P into smaller chunks and investing by sector. By doing so you assume a greater risk by losing the diversification of the S&P, but also the potential of a greater return. I like the concept, although I took a loss on XLE. I think you could do better with a good mutual fund if you don't want to take the time to pick individual stocks.

[kv968]

You are referring to SPDRs - Standard and Poors Depository Receipts. My only experience with them is with XLE - the energy sector SPDR. You are basically breaking the S&P into smaller chunks and investing by sector. By doing so you assume a greater risk by losing the diversification of the S&P, but also the potential of a greater return. I like the concept, although I took a loss on XLE. I think you could do better with a good mutual fund if you don't want to take the time to pick individual stocks.

SPDR's ETF's break down the markets not only into sectors but assets (stocks and bonds), market caps (i.e. small, mid, etc...), style (i.e. growth, value, etc...), and countries. If you want to invest in the S&P 500, SPY is their ETF that tracks it.

What I'm getting at is that you're right with your statement of investing in certain sectors is riskier than a broader index but even with a sector ETF you're still buying a basket of stocks, not individual ones. I'm just concerned that your statement of "you could do better with a good mutual fund if you don't want to take the time to pick individual stocks" makes it sound as if ETF's are the equivalent to picking a single stock which they really aren't. Maybe that wasn't your intention but that's how I read it and I just wanted to clairify.

[dh1989]

I'm just concerned that your statement of "you could do better with a good mutual fund if you don't want to take the time to pick individual stocks" makes it sound as if ETF's are the equivalent to picking a single stock which they really aren't. Maybe that wasn't your intention but that's how I read it and I just wanted to clairify.

I meant in terms of diversification. Buying an SPDR typically concentrates you entirely in one sector (as the case with XLE). Still better risk-wise than buying individual stocks, but if an entire sector does poorly, so does your investment.

[kv968]

I meant in terms of diversification. Buying an SPDR typically concentrates you entirely in one sector (as the case with XLE). Still better risk-wise than buying individual stocks, but if an entire sector does poorly, so does your investment.

But you don't have to buy just sectors. The SPY is the biggest ETF that tracks the S&P 500. TMW tracks the total market, DGT tracks the Global Dow Index, LAG tracks the Barclay's Aggregate Bond Index, etc...

Some may have lower volumes than others but the diversification is definitely there if you want it. You CAN dwell it down to sectors or even industries, but you can have totally broad exposure also.

[Slug]

Just a note to say many brokerages allow you to buy and hold these commission-free.