The S&P 500 (^GSPC +0.98%) tracks 500 of the largest U.S. companies on the stock market and is the most closely followed stock market index. There are various exchange-traded funds (ETFs) that track the index, but one of the most popular is the SPDR S&P 500 ETF Trust (SPY +1.00%).
This ETF boasts more than $680 billion in assets under management, and it has been a rewarding investment since its inception. However, its performance has been particularly impressive over the past decade with a gain of 219%. If you had invested $1,000 in the fund 10 years ago, it would be worth $3,190 today.
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Being up 219% after a decade might not seem celebration-worthy when investors regularly see high-flying growth stocks achieve similar gains in as little as a year, but it's important to maintain the proper perspective.
An fund like the SPDR S&P 500 ETF Trust has long been considered a well-rounded investment because it offers a trifecta: diversification (although it has become more concentrated in recent years), low cost (SPY has a 0.0945% expense ratio), and a strong contingent of blue chip stocks.
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The S&P 500 isn't a perfect parallel for the U.S. economy, but it tends to move in the same direction long term as the companies within the index naturally benefit from a growing economy. If you're looking for something that can be a cornerpiece of your portfolio, the SPDR S&P 500 ETF Trust is it.
