The SPDR Portfolio S&P 500 ETF (SPLG) offers exposure to the S&P 500 Index, one of the world’s best-known and most widely followed stock benchmarks. The S&P 500 Index includes many large and well known U.S. firms, often called ‘Blue Chips’, including Johnson & Johnson, Apple, Microsoft, Amazon and Visa. Investors should think of this as a play on mega and large cap stocks in the American market. These companies are sizable core holdings of any portfolio, and SPLG’s ultra-low management fee makes it an appealing choice for the category.
SPLG may cause many veteran ETF investors to scratch their heads because State Street’s other S&P 500 fund — the S&P 500 ETF Trust, better known by its ticker SPY — is the oldest and largest ETF on the market. The 1993 debut of SPY pretty much established the modern ETF industry, and SPY is often touted as one of the most-traded securities on the planet. So why did State Street bother with a clone? There are a few reasons. Like other early ETFs, SPY was structured as a UIT, which means it lacks the flexibility to lend out shares and reinvest dividends. These factors are part of the reason why SPY’s management fee has remained persistently higher than upstart rivals like the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO), which helped those funds swipe market share from SPY. SPLG is State Street’s answer to that problem. SPY’s higher fee won’t deter short-term traders, who are more concerned with liquidity than fees, but for buy-and-old investors, SPLG is the better alternative.
State Street launched its ultra-low-cost SPDR Portfolio lineup in October 2017 after years of losing market share to cheaper rivals at BlackRock, Schwab, and Vanguard. This was a humiliating setback since State Street pretty much founded the modern ETF market in 1993 with the launch of SPY. State Street was late to the ultra-low-cost space — BlackRock launched its low-cost iShares Core series five years earlier — but has pushed hard to make up ground. Many of its “Portfolio” funds, including SPLG, were renamed and repriced for this purpose. Prior to October 2017, SPLG tracked the Russell 1000 index and traded under the ticker ONEK. Prior to January 24, 2020, it tracked the SSgA Large Cap Index.