Below you will find details about the top 3 ETFs in the United States based on their Asset Under Management. All 3 are index ETFs. After the presentation of each ETF, you will find a detailed analysis with pros and cons.
SPDR S&P 500 ETF (SPY)
With 333 Billion dollars asset under management, SPY is the king of the hill! Here’s some key facts:
- The management expense ratio is only 0.09%. This means if the ETF make a 10% gain, there is only 0.09% that will be deducted to cover the fund’s management expenses;
- The ETF will try to mimic the performance of the S&P 500 index. The S&P 500 index includes the largest 500 companies traded in the US;
- Performance of this ETF is shown below (data extracted from https://etfdb.com/ Cumulative return)
This ETF has a cumulative return of 113.9% over 5 years period which is really remarkable. This performance can be explained by the fact that the S&P 500 is more and more dominated by the technology sector (companies like Facebook, Google, Amazon…etc). This sector has shown great strength and also was not impacted by the pandemic.
This ETF is popular and it’s understandable. With low MER and high diversification which includes only large solid companies (mostly Blue chips), it’s a no brainer.
BTW, it’s worth noting that this ETF was the first ever ETF created in the US.
Holdings:
| Name | Weight |
| Apple Inc. | 6.73% |
| Microsoft Corporation | 5.69% |
| Amazon.com Inc. | 4.48% |
| Tesla Inc | 2.00% |
| Facebook Inc. Class A | 1.98% |
| Alphabet Inc. Class A | 1.79% |
| Alphabet Inc. Class C | 1.73% |
| Berkshire Hathaway Inc. Class B | 1.40% |
| Johnson & Johnson | 1.34% |
| JPMorgan Chase & Co. | 1.24% |
Analysis and comments regarding SPY
Pros: The companies held in the portfolio of SPY are all large or mega cap companies. So, it’s basically dominant players in their industries and the largest in the country. This gives any investor an exposure to a high quality diversified portfolio. Whether you have a small amount to invest or a large one, one of the easiest ways to benefit from the return of large corporations is to buy SPY.
Cons: the MER in comparison for instance to ishares Core S&P 500 ETF (IVV) is high. SPY charges 0.09% MER while IVV has an MER of only 0.03%. Notes both ETFs have the same objective and holdings. Index investing is subject to market volatility. However, if you are long term investor this should not be a concern.
iShares Core S&P 500 ETF (IVV)
iShares Core S&P 500 ETF (Ticker IVV) is very similar to SPY (SPDR S&P 500 ETF). Same objective, which is tracking/mimicking the performance of the S&P 500. This ETF has 242 Billion dollar in assets! The MER is super low at 0.03 % only. That’s lower than the most popular ETF in the US the SPDR S&P 500 ETF which MER is 0.09%.
The performance of the fund is quite similar to SPY since both track the S&P500 (data extracted from https://etfdb.com/ Cumulative return)
This ETF has a cumulative return of 114.12% over 5 years period which is really remarkable and a bit superior to SPY. And, you guessed it! It has a higher return because the MER is lower.
Holding
| Name | Weight (%) |
| APPLE INC | 6.72% |
| MICROSOFT CORP | 5.68% |
| AMAZON COM INC | 4.47% |
| TESLA INC | 2% |
| FACEBOOK CLASS A INC | 1.97% |
| ALPHABET INC CLASS A | 1.78% |
| ALPHABET INC CLASS C | 1.73% |
| BERKSHIRE HATHAWAY INC CLASS B | 1.4% |
| JOHNSON & JOHNSON | 1.34% |
Analysis and comments regarding IVV
Pros: The companies held in the portfolio of IVV are all large or mega cap companies (similar to SPY). IVV has the same advantages of SPY with a lower MER. It’s definitely a great choice.
Cons: Index investing is subject to market volatility. However, if you are long term investor this should not be a concern.
Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF (VTI) is in the third spot in the list of the largest ETFs in the United states with Asset under management of over 211 Billion dollars. The objective of this ETF is to track the whole stock market whether it’s Large mega cap part of the S&P500 or the mid/small caps. So, it offers an exposure to the market in large with a wide range of stock holdings.
One other strength of this ETF is its MER which is only 0.03%.
The performance of this ETF is slightly better than SPY and VTI (data extracted from https://etfdb.com/ Cumulative return)
Holdings
| Name | Weight |
| Apple Inc. | 5.28% |
| Microsoft Corporation | 4.37% |
| Amazon.com Inc. | 3.61% |
| Facebook Inc. Class A | 1.71% |
| Tesla inc | 1.39% |
| Alphabet Inc. Class A | 1.38% |
| Alphabet Inc. Class C | 1.27% |
| Johnson & Johnson | 1.08% |
| Berkshire Hathaway Inc. Class B | 1.07% |
| JPMorgan Chase & Co. | 1.01% |
Analysis and comments regarding VTI
Pros: Has the largest number of holdings in the top 3 because this ETF tries to mimic the whole market (Large, mid and small caps). The MER is low at 0.03%! The performance of this ETF (cumulative return) was highest among the Top 3.
Cons: Even though, this ETF tracks the whole market it still has most of the value of its holding in the top 500 companies which is similar to IVV and SPY. Index investing is subject to market volatility. However, if you are long term investor this should not be a concern.