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SPY vs SPYG: Which SPY ETF Is Best?

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We compare SPY vs SPYG:

Generally, every investor will want to compare different options to choose the best for them.

However, for SPY and SPYG, this comparison may not be a hassle as the difference between the two ETFs is clear.

SPY is a value fund, while SPYG focuses on growth stocks.

SPY tracks the S&P 500 index.  The underlying index measures the performance of 500 large-cap companies in the U.S.

On the other hand, SPYG tracks S&P 500 Growth Index.  It focuses on the growth companies in the S&P 500 index, seeking to replicate their investment returns.

In this article, we will consider factors like the performance of the two ETFs, the holdings, and the investment cost to make their differences clearer.

SPY vs SPYG Graphic

 

SPY vs SPYG Comparison

The primary difference between SPY and SPYG is that SPY tracks the total S&P 500 Index while SPYG tracks the growth stocks from the S&P 500 Index.

Another significant difference is the number of stocks in each, with SPY having 505 different companies in the index compared to 281 with SPYG.

SPY vs SPYG Comparison Chart

The biggest difference between SPY vs SPYG:

  • SPY tracks the total S&P 500 index
  • SPYG Growth ETF tracks stocks (companies) held in the S&P 500 index that represent the strongest growth characteristics based on: sales growth, earnings, change to price ratio, and momentum.

In other words, SPYG is a growth ETF while SPY is a value ETF.

Let’s take a brief look at what that means.

Value funds focus on stocks generally considered undervalued but characterized by higher dividend yield.

Growth funds, on the other hand, are interested in capital appreciation and not dividends.  Therefore, most growth funds look for the biggest players in the market, those who have recorded high growth.

Value funds tend to be better for long-term investment since they bring steady returns.

Growth funds could serve both short-term and long-term investors.

 

SPY vs SPYG Sectors

SPY vs SPYG Sectors

The table shows that SPY and SPYG are weighted heavily towards Information Technology companies with 27.7% and 41.93%, respectively.

SPYG being a growth ETF is a plus since tech companies have a rapid growth rate.

Let’s look at the companies these ETFs are invested in with their top 10 holdings.

SPY vs SPYG Holdings

As you can see, the top 7 holdings for SPY and SPYG are the same except that the percent weight is doubled for SPYG.  Therefore Apple makes up a bigger part of SPYG’s assets than SPY.

It may not be so surprising that tech companies make up the majority of all of the top 10 holdings for SPYG Growth ETF.

 

SPY vs SPYG Performance

SPY Performance & Returns

Over the last 10 years, SPY has had an average return of 14.71% annually.  This is almost the same as the performance of the S&P 500 over the same time frame.

SPY Performance

The goal of SPY is to mirror the results of the S&P 500 index.

Here is the growth of $10,000 over 10 years with SPY:

SPY Performance Chart

 

SPYG Performance & Returns

Over the last 10 years, SPYG has had an average return of 17.14% annually.  This means SPYG has outperformed SPY by 2.43% annually in the previous 10 years.

SPYG Performance

From the chart, you can see clearly that the growth fund (SPYG) outperformed the value fund (SPY).

 

SPY Description

Popularly called the SPY ETF, the SPDR S&P 500 ETF Trust is one of the earliest (often considered the first) and most popular ETFs.

The fund seeks to track the Standard & Poor’s (S&P) 500 index, a benchmark index that comprises the 500 largest companies in the United States.

These stocks are selected based on size, liquidity, and industry.

The S&P 500 is one of the major benchmarks of the U.S. equity market and an indicator of the financial health of the economy.

SPY aims to replicate the investment results that, before expenses, correspond to the price and yield of the component common stocks of the S&P 500 Index.

SPDR’s SPY came into existence in 1993 with just $6.5 million in assets.

SPY Characteristics:

  • Fund Inception: 1993
  • Tracks the S&P 500 Index
  • Expense Ratio: 0.09%
  • Number Of Stocks: 505
  • Top 10 Holdings: 28%
  • Yield 1.2%

Although the fund had some challenging times at its early stage, it later rose with significant performance.

As of 2022, the size of the ETF market has reached an all-time high of $463.7 billion in assets.

SPY is a market capitalization-weighted, with its highest weighting in the information technology industry (27.70%).  Companies such as Apple, Microsoft, and Amazon.

The ETF is listed on the New York Stock Exchange’s Arca exchange and can be traded on many different platforms.

 

SPY Holdings

The top 10 holdings for SPY make up 28% of its total assets.

These are the top 10 holdings for SPY:

SPY Top Holdings

SPDR S&P 500 ETF Trust (SPY) is largely made up of Apple, Microsoft, Amazon, Google, and Facebook.

However, it also provides exposure to over 500 other stocks.

 

SPYG Description

The SPDR Portfolio S&P 500 Growth ETF (SPYG) seeks to track the investment results that correspond to the total returns of the S&P 500 Growth Index.

The S&P 500 Growth Index measures the performance of the large-capitalization growth segment of the U.S. equity market.

SPYG competes with similar funds like Vanguards VOOG with a similar portfolio composition.

The fund tracks the performance of the large-capitalization growth segment of the U.S. equity market that represents the strongest growth characteristics.

The characteristics include:

  • Sales Growth
  • Earnings Change To Price
  • Momentum

The index is float-adjusted market-capitalization-weighted.

SPYG is also among the low-cost core SPDR Portfolio ETFs that provide exposure to the strongest growth characteristics of S&P 500 companies.

 

SPYG Holdings

The top 10 holdings for SPYG make up 49% of its total assets.

These are the top 10 holdings for SPYG:

SPYG Top Holdings

SPDR Portfolio S&P 500 Growth ETF (SPYG) is largely made up of Apple, Microsoft, Amazon, Facebook, and Google.

However, it also provides exposure to over 200 other stocks.

 

SPY vs SPYG Fund Management Fees

The expense ratio is one of the key factors that investors use to measure and get an idea of how profitable their investment will be.

It simply tells you how much the fund charges you to manage the investment annually.

For ETFs, the expense ratio is usually low.

One of the main ideas behind the introduction of ETFs is to offer a solution to the high investment costs in the industry.  Therefore, it is one of the lowest-cost investment vehicles.

SPY and SPYG are both ETFs, and as we’ve seen, their expense ratios are very low.  SPY vs SPYG = 0.09% vs 0.04%.

Amongst the two, SPY is a more expensive fund, higher than SPYG by 0.05%.

This may not be a significant difference, but it may make a recognizable difference in the long term (say 30 years).

If your concern in the SPY or SPYG decision includes fees (most likely does), the edge goes to SPYG.

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SPY vs SPYG Which Is Better?

The main difference between SPY and SPYG is that SPY tracks the total S&P 500 Index while SPYG tracks only the growth stocks in the S&P 500 Index.

This means that these stocks have been generating revenues and have the tendency of continuity.

Historically, value funds have outperformed growth funds.

In recent years, the narrative seems to be changing, growth stocks dominating value stocks.

From these two funds, we can see this is the case.  SPYG, a growth fund, has maintained a consistent record of higher performance over SPY.

However, this is not a stamp on the profitability of the SPYG over the SPY in the future.

Some socio-economic factors may have been responsible for the lower performance of SPY.  However, the tables could turn in the future.

The past result is not an accurate measure for future performance.

In SPY’s defense, its performance is higher when compared to many popular actively managed funds, which carry an even higher expense ratio.

In addition, SPY also has a good blend of both growth and value stocks.

At this point, you have all the information you need to decide between SPY and SPYG.

All investments involve risks.  There’ll be times of gains as well as losses.

Going by the facts we have, SPYG has done better over the years.  This is combined with its lower expense ratio and inclusion of big tech companies.

SPY gives investors higher diversification in case value stocks win over the next decade.

Of course, the ultimate decision depends on your investment goals and risk tolerance.

 


Disclaimer
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This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.