Spiders, trading on the AMEX (American Stock Exchange) under the ticker symbol "SPY," are Standard & Poor's 500 Depositary Receipts. Just like S&P 500 Index funds, they represent a bundle of 500 of America's biggest and brightest corporations, such as PepsiCo, ExxonMobil, Intel, and Wal-Mart. But, unlike index funds, which are mutual funds, Spiders are structured like shares of stock. They're valued at about 1/10 of the value of the S&P 500 index (around $112 each, as of this writing).
Spiders are "exchange-traded funds," often referred to as ETFs by those in the know. As ETFs, they have some advantages over their index-fund brethren. Whereas funds sometimes have minimums of several thousand dollars, you can buy and sell as little as one Spider share at a time -- though with commissions factored in, as they always should be, that might not be the most cost-effective move. And, while you have no control over when mutual funds generate taxable capital gains, with Spiders, gains or losses occur mainly when you sell your shares.
Learn more about Spiders in this classic article. And take some time to learn more about ETFs and to decide whether ETFs are for you. Our ETF Center will teach you a lot. It features info on how ETFs stack up against mutual funds, how to develop an investment strategy with ETFs, pitfalls to avoid, and how to avoid ETF imposters. There are plenty of ETFs that can give you instant exposure to many emerging markets nooks and crannies.
These articles may also be of interest:
- Mutual Funds vs. ETFs
- Three Things to Know About Your ETF
- Buy the Whole Mall
- The Age of the Exchange-Traded Fund
- ETFs and Falling Fund Fees
To learn more about investing Foolishly, visit our Fool's School and our Investing Basics area. Or check out some of our inexpensive and well-regarded online how-to guides, which feature money-back guarantees.
Intel and Wal-Mart are Motley Fool Inside Value recommendations.