SPY vs SPYG: Which is Best?

Mutual funds, index funds, and exchange traded funds should be a staple for any serious investor’s portfolio. Both are safer investments than any individual stock and can offer diversification. You can spend hours or days sifting through hundreds if not thousands of different funds. Or, you can go with two tried and true funds such as SPY vs SPYG.

Many funds aim to track specific indexes. Both SPY and SPYG are examples of this, as both funds aims to track the S&P500 market index, but in slightly different ways.

As you might guess solely from their names, these are two very similar funds, so when it comes to SPY vs SPYG, which is better for your investing strategy? Here we’ll aim to compare the two funds to determine just that.

SPY vs SPYG: Issuer

When it comes to SPY vs SPYG from an issuer standpoint, you’re dealing with only one firm, State Steet Global Advisors.

State Street Global Advisors (SSGA) is the creator of SPY (SPDR® S&P 500® ETF Trust) and SPYG (SPDR® Portfolio S&P 500® Growth ETF), and has over 4.1 trillion in managed assets as of December 2021.

SSGA is one of the largest issuers of both mutual funds and exchange-traded funds. SPY was created way back in 1993 and was the first ETF listed in the United States.

SPY vs SPYG: Underlying Index Followed

As mentioned early, SPY aims to track the S&P500 market index. The S&P 500 aims to track the 500 leading publicly traded US companies. Market cap is the primary criterion for a company to be included in the S&P 500 index fund, but it is not the only criterion. 

Investing in the top 500 companies in the U.S. will mean mostly large-cap stocks. However, there could be a few mid-cap and small-cap investments as well. 

SPYG also invests in stocks within the S&P 500, however, it varies slightly from SPY in that it is focused more on growth. From SSGA’s website, SPYG will invest in stocks in the S&P 500 Index exhibiting the strongest growth characteristics based on: (i) sales growth; (ii) earnings change to price; and (iii) momentum. 

Both funds will have many stocks, as most funds do. SPY currently holds about 504 stocks, while SPYG only holds roughly 240. With fewer stocks and a focus on growth, SPYG could experience more volatile prices when the market has higher volatility. 

SPY vs SPYG: Expense Ratios

Expense ratios can be a vital piece of information when deciding what fund to invest in. Even a small difference can become thousands of dollars over the course of investing in a fund for 10 or 20 years.

Essentially, with managed funds, there are expenses that go along with it. These expenses could be salaries to pay analysts or portfolio managers, management fees, rent for office space, and many others. Many funds will pass some or all of these expenses on to you, the investor. The amount that will be passed to you is shown as the expense ratio.

While both SPY vs SPYG have low expense ratios overall, SPY’s ratio is more than double that of SPYG. SPY’s expense ratio come in at .0945% while SPYG has a ratio of .04%. 

As stated before, both are very low, but even the small difference in ratios here could add up to thousands of dollars in fees and there for less money invested and gains on that money over the course of 10,20 or 30 years on investing. Keep this in mind when determining which fund you’ll choose in SPY vs SPYG.

SPY vs SPYG: Minimum Initial Investments

Minimum initial investments (MII) will vary per fund and firm. The minimum initial investment only applies the first time you invest in a fund. Many funds require anywhere from $100 – $5000 or more for your first investment. After that, you are free to invest any amount you wish on subsequent investments with the same fund. 

SPY vs SPY from a minimum initial investment standpoint is relatively the same as both only require the purchase of one share. As of writing this, SPY stands at about $389 per share while SPYG is at roughly $55 a share.

Obviously, there is a difference in initial investment, but again, this is a one-time and after your first purchase, you can invest as much or as little as you want. 

SPY vs SPYG: Net Assets and Holdings

When looking at actual assets under management, you’ll find a big difference in SPY vs SPYG.SPY holds about 355 billion compared to SPYGs 12 billion. As for their top holdings, they have similar stocks in their top 5, but the rest of the top 10 holdings vary due to SPYGs emphasis on growth. 

SPY Top 10 Holdings

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SPYG Top 10 Holdings

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SPY vs SPYG: Compositions

As mentioned earlier SPY aims to track the S&P 500 index, so it holds about 500 individual stocks overall. SPYG also aims to track the S&P 500, but with more of a growth focus. This is why SPYG hold about half as many stocks and as you can see from above, the top 10 stocks are weighted much more than SPY. 

SPY vs SPYG: Overall Performance

Of course, what most investors will put at the top of their criteria when determining which fund to invest in will be performance! See below for SPY vs SPYG in overall performance. 

SPY Performance:

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SPYG Performance:

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As you can see, each fund has very similar returns over the course of 1, 3, 5, and 10 years.The overall growth for SPYG is likely due to its poor performance in 2022 of -21% vs SPYs -12%.

SPY vs SPYG: Which is better?

Before investing in any stock, mutual-fund, or anything else, it’s always a good idea to do your research. Whether it will be a short term investment or long term investment, you can never have too much information.  

When making any investment, it comes down to what you are comfortable with and your investment strategy. The big factor in SPY vs SPYG is not performance as neither will greatly outperform the other. For me, it comes down to the expense ratio. 

It’s possible that either fund outperforms the other during any stretch of time. Which one is better would be anyone’s guess. However, the expense ratio is a known value and in this case, SPYG comes out as the winner.

SPY vs SPYG: Final Thoughts

SPY vs SPYG is a close call no matter how you look at it.  Both funds are issued by a larget issuer in State Street Global Advisors. A diversified portfolio is always important. SPY is more diversified so the volatility could be less, but the overall performances don’t typically differ too much. 

Where the real difference comes in is the expense ratio, with SPY’s being about double that of SPYG. That small amount might not seem like much, however, over 10, 20, or even 30 years of investing, that could mean tens of thousands of dollars, if not more. 

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