On Standard & Poor’s Depository Receipts

Posted on September 12, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Don’t be Afraid of ‘SPIDERS’

By Dr. David Edward Marcinko MBA MEd CMP™

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

What they are – How they work?

No, I’m not talking about creepy, crawly insects. I’m referring to Standard & Poor’s Depository Receipts (SPDRs, or spiders), a derivative product, which combines many of the advantages of index funds with the superior trading flexibility of common stocks.

Creation

SPDRs were created in January 1993 by the American Stock Exchange. SPDRs are units in a trust holding the S&P 500 securities in proportion to their index weighting and which are adjusted as necessary to track changes made to the index by S&P. They pay quarterly cash dividend distributions based on the accumulated dividends paid by the stocks held in the SPDR trust minus an annual fee of about .19% of principal to cover trust expenses. They trade at approximately one-tenth the value of the index.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Do you use SPDRs; why or why not? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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ETFs: Happy 31st. Birthday

Posted on August 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

EXCHANGE TRADED FUNDS

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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Thirty one years ago yesterday, the first exchange-traded fund (ETF) in the US launched. In the decades since, these once-niche investment products have become ubiquitous on Wall Street, disrupting the mutual fund industry and transforming people’s relationship with the stock market.

CITE: https://www.r2library.com/Resource/Title/0826102549

Exchange Traded Funds

On January 29th, 1993, a spider decoration hanging in the American Stock Exchange heralded the arrival of the first US ETF—what’s now called the SPDR S&P 500 ETF Trust. It had a measly $6.5 million in assets and no one really paid much attention to it. The first US ETF is now the world’s biggest, with $375 billion in assets, and the ETF sector in total had amassed $6.5 trillion in assets by the end of 2022. While mutual funds still have 3x the amount of assets that ETFs have, the tide is turning: Investors poured $600 billion into US ETFs on a net basis last year, but pulled out almost $1 trillion from mutual funds.

ETFs and Tax Efficiency

Definition: An ETF is simply a security that tracks the performance of a particular basket of investments, like stocks. The SPDR S&P 500 ETF, for example, tracks the performance of companies in the S&P 500. Many other ETFs also track indexes, allowing people to park their money in funds that follow the ebbs and flows of the broader market.

If that sounds like a mutual fund…it’s similar. But ETFs have a few advantages over its stuffy, older cousin.

  • ETFs generally have lower fees than mutual funds.
  • They have built-in tax benefits.
  • They’re accessible to anyone with a brokerage account—you can buy or sell them like you would a stock.

CITE: https://www.r2library.com/Resource/Title/0826102549

Finally, all these advantages aside, the rise of ETFs has been also fueled by the growing recognition that trying to invest in individual stocks is foolish. Passive index funds, which aren’t designed for frequent trading, have surged to represent almost half of US fund assets, compared to less than 2% in the early ’90s.

Exchange Traded Funds (ETFs)

COMMENTS APPRECIATED

Thank You

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ORDER: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

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