Have you ever noticed that the SPY trades at less than the intended 10% of the S&P 500 index (SPX) value? Well, I have always assumed it was the effect of the cumulative expense ratio implicit in the SPY (0.09%), and that this divergence would become greater over time.

My question: Is this accurate? In 10 years, should we expect the SPY to slip another percentage point or so below the actual index?

This is really a theoretical issue, as there is no way to actually invest in SPX. I think the only takeaway is that investors are better off choosing the lowest cost vehicle that tries to mimic the performance of the index.

Thoughts?

Just throw it into any of the S&P 500 mutual funds like VOO or SWPPX, which have the lowest expense ratio.

Good thoughts, with a slight correction:

VOO is not a mutual fund - it's an ETF, which has some benefits and drawbacks versus mutual funds. I prefer ETFs for their tax efficiency and flexibility to trade intraday.

Both of these are lower cost than SPY - Expense ratios:

• SPY - 0.09%
• VOO - 0.03%
• SWPPX - 0.02%

So, if you're a long-term buy and hold investor, the Schwab mutual fund appears to be the best alternative. If you like to hedge or trade options (covered calls or protective puts, for example), SPY has by far the most liquid options market (VOO is not bad, but not nearly as attractive bid/ask spreads and liquidity as SPY). Intraday traders should use SPY or VOO.

Not directly SPY related but FNCMX (the fidelity QQQ clone) has done well for me the past few years too. I am sure they have an SPX clone too.

Ragoo said:

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nortex97 said:

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Not directly SPY related but FNCMX (the fidelity QQQ clone) has done well for me the past few years too. I am sure they have an SPX clone too.

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FXAIX

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Looks like this Fidelity mutual fund is the buy-and-hold leader, for now. Expense ratio is 0.015%.

I bleed maroon said:

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Ragoo said:

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nortex97 said:

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Not directly SPY related but FNCMX (the fidelity QQQ clone) has done well for me the past few years too. I am sure they have an SPX clone too.

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FXAIX

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Looks like this Fidelity mutual fund is the buy-and-hold leader, for now. Expense ratio is 0.015%.

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100% of my 401k is in this fund because of the expenses and S&P tracking