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Best SPDR ETFs to invest in

March 27, 2020 10:00 UTC
Reading time: 17 minutes

Did you know that the value of assets managed by global exchange traded funds (ETFs) has more than $6 trillion? In 2005 it was only $417 billion, proving just how popular these products have been for investors. Providers of these funds include Blackrock, Vanguard and State Street, with the latter creating the largest ETF in the United States called the SPDR S&P 500 ETF.

ETFs

In this article, you will learn:

  • What the SPDR stands for.
  • Why investors choose to invest in SPDR ETFs.
  • How to start investing in SPDR ETFs.
  • The best SPDR ETFs to invest in.
  • How to open an Invest.MT5 account with just €1 minimum deposit so you can start to build your own portfolio and invest in stocks and ETFs from 15 of the largest stock exchanges in the world.

What does SPDR stand for?

SPDR stands for the Standard & Poor's Depositary Receipt and is a family of exchange-traded funds (ETFs) that are managed by State Street Global Advisors (SSGA). The funds are traded in the United States, Europe and the Asia-Pacific regions are informally known as Spyders or Spiders.

What are SPDR ETFs?

The Standard & Poor's Depositary Receipt exchange-traded fund (ETFs) began trading on the American Stock Exchange (AMEX) in 1993. Initially, the aim of the exchange-traded fund was to allow investors to invest in stock market indexes like the S&P 500 index which tracks the largest 500 stocks listed on the New York Stock Exchange.

In 2016, State Street Global Advisors SPDR S&P 500 ETF was the largest in the United States with assets reaching $224.82 billion. However, due to the popularity of exchange-traded funds as a whole, companies like State Street Global Advisors expanded beyond providing a way to invest in the stock market indexes.

The SPDR Gold Shares ETF was launched in 2007 and was, at one point, the second-largest exchange-traded fund in the world. However, it subsequently dropped out of the top ten in 2014 as gold prices fell and investors opted for shares in high growth technology companies.

Why invest in SPDR ETFs?

As the exchange-traded fund industry grew, State Street Global Advisors grew its offering of the SPDR and branched out into other sectors and now offers more than 700 SPDR ETFs across the United States, Europe and Asia-Pacific.

The first offering included sub-sectors of the S&P 500 stock market index based on industry. These included the likes of the Energy Select Sector SPDR Fund ETF (XLE), the Financial Select Sector SPDR Fund Fund ETF and many others. This allowed investors to invest in specific sectors like energy, financial and many others rather than the whole stock market index.

This is just one reason SPDR ETFs are popular. They allow for a more focused investment into a specific sector like the ones mentioned above, as well as others such as healthcare, retail, mining, utilities, real-estate and more. Did you know that with Admiral Markets UK Ltd you can access a wide range of SPDR ETFs to invest in and trade on? You can view them by searching for SPDR in the Admiral Markets Contract Specification page which lists all the available assets you can trade on.

Types of Instruments

Source: Admiral Markets Contract Specification

If you are considering investing in SPDR ETFs or would like to invest in other stocks and ETFs from around the world, you may consider the Invest.MT5 account where you can enjoy benefits such as:

  • The ability to invest in thousands of stocks and ETFs from 15 of the largest stock exchanges in the world.
  • Open an account with just €1 minimum deposit and invest from just $0.01 per share with minimum transaction fees of just $1 on US stocks.
  • Receive free real-time market data, with no delays, at no extra cost.
  • Create a stream of passive income by collecting dividend payouts.
  • Use the world's most popular multi-asset class trading platform, MetaTrader 5.

You can get started right now by clicking the banner below and enjoying all of the features above and more!

Invest in Stocks & ETFs

What are the best SPDR ETFs to invest in?

Choosing the best SPDR ETFs to invest in depends on a variety of factors. Some are higher risk investments than others and an individual's risk profile is a big factor. However, the first step is to understand what SPDR ETFs are available to invest in within different sectors and having a bigger picture understanding of what exposure you would like to have.

For example, many investors choose to focus on the eleven main sectors that make up the overall S&P 500 stock market index which includes:

  • Consumer Discretionary
  • Consumer Staples
  • Energy
  • Financials
  • Health
  • Industrials
  • Materials
  • Real estate
  • Technology
  • Communication services
  • Utilities

However, the weighting of each of these sectors is not equal in the S&P 500 index. As of 28 February 2020, the largest sector in the index was information technology, followed by health care and then financials as the sector breakdown image below shows:

Sector wise performance

Source: S&P Global

Let's have a look at some of the sectors shown above and how SPDR ETFs can help investors gain exposure to them. As we will be looking at these sectors and exchange-traded funds in more detail, it may be useful to download your MetaTrader 5 trading platform provided by Admiral Markets so you can follow through the examples.

Did you know that you can download the MetaTrader 5 trading platform provided by Admiral Markets completely FREE? After downloading it you can view historical prices of a wide range of instruments covering multiple asset classes. You can start your free download by clicking the banner below:

Trade With MetaTrader 5

The Technology Select Sector SPDR Fund ETF (XLK)

Many investors like to have exposure to technology companies due to their importance in the world. This importance also helps drive company profits which tends to lead to higher share prices.

Here are the key features of the Technology Select Sector SPDR Fund ETF, according to the key features document on the State Street Global Advisors website:

  • The Technology Select Sector SPDR Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Technology Select Sector Index (the "Index")
  • The Index seeks to provide an effective representation of the technology and telecom sector of the S&P 500 Index
  • Seeks to provide precise exposure to companies from technology hardware, storage, and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components.
  • Allows investors to take strategic or tactical positions at a more targeted level than traditional style based investing

Through this exchange-traded fund, users can gain exposure to a variety of technology companies, instead of trying to find the one that will outperform the rest. The funds top holdings, as of 13 March 2020, are shown below:

Top fund holdings

Source: SSGA

As you can see from above the fund holds some of the biggest and well-known technology companies such as Microsoft, Apple, Visa and many more. The weighting of each of the companies in the fund is similar to the weightings of the companies in the S&P 500 index. Therefore, with the Technology Select Sector SPDR Fund ETF investors can gain exposure to the sector as a whole.

Below is the long-term, monthly price-chart of the fund taken from the MetaTrader 5 trading platform provided by Admiral Markets for free:

MetaTrader 5, XLK, Monthly

Source: Admiral Markets MetaTrader 5, XLK, Monthly - Data range: from 1 December 1998 to 16 March 2020, accessed on 16 March 2020 at 3:17 pm GMT. Please note: Past performance is not a reliable indicator of future results.

In the chart above, it's clear to see the 2000 tech bubble crash, as well as the subsequent rally higher after the 2008 financial recession.

There are many other types of SPDR ETFs to invest in. They cover different sectors as the eleven highlighted above, as well as other industries and products. You can see the full list in the MetaTrader 5 trading platform provided by Admiral Markets by following these steps:

  1. Open your MetaTrader 5 trading platform
  2. Open the Market Watch column (Ctrl+M)
  3. Right-click and select Symbols
  4. In the search box type 'SPDR' where the following image will open:

the MetaTrader 5 trading platform

An example of the MetaTrader 5 trading platform provided by Admiral Markets, showing the Symbols window, searching for 'SPDR'.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and do not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Some of the instruments above include the:

  • SPDR S&P Emerging Asia Pacific ETF for those who would like exposure to a geographical region.
  • SPDR S&P Global Natural Resources ETF for those who want exposure to the largest securities in the agriculture, energy and metals and mining sectors.
  • SPDR MSCI Europe Financials UCITS ETF for those who want exposure to European companies in the financial sector.

As there is a large variety of instruments to invest in, proper risk management is essential.

SPDR ETF investing risk management

It is quite common for beginner investors to put all their eggs in one basket expecting their decisions to always work out. For example, an investor might have £10,000 to invest and may choose to invest it all into just one stock or exchange-traded fund. However, this means that there is no capital left if another opportunity comes along. Also, a sharp - yet temporary - decline in the price of the invested asset may cause the investor to make an emotional decision and exit early, giving into short-term emotions rather than long-term fundamentals.

A popular risk management technique used by many different types of investors is to diversify their assets and spread investments across different types of instruments covering different sectors, regions and so on. When one asset is not performing well, another could be. Overall, this can help to build a more diversified and balanced portfolio which can help to balance out the effect of - but not eliminate - changing market conditions.

Identifying your trading and investing style is another key component to take into consideration.

Technical vs Fundamental analysis

The most common types of analysis investors use when identifying the best SPDR ETFs to invest in, include:

  1. Fundamental analysis. This involves analysing a company, sector or region at a financial level, analysing metrics such as sales performance, earnings, debt levels, new product announcements and so on.
  2. Technical analysis. This type of analysis is more common and involves analysing a company, sector or region's historical trading price via a price chart. Trading patterns and technical trading indicators can often leave clues on the trend and possible turning points in the market.

Did you know you can view expert traders perform live technical and fundamental analysis in the Admiral Markets Trading Spotlight webinars? Three times a week professional traders cover a range of topics including how to perform technical analysis and how to identify trading opportunities on different asset classes. To reserve your spot in these complimentary webinars, simply click on the banner below:

Free Trading Webinars

How to start investing in SPDR ETFs

Investing in stocks and ETFs can be done in just three simple steps:

  1. Open a stock and ETF account.
  2. Download your investing platform.
  3. Open a ticket and make your first investment!

1. How to open your Invest.MT5 stocks and ETFs account

To open an account, visit the Admiral Markets homepage and click on the green button labelled Create Account:

Then fill in the details required such as your first name, last name, email and then password:

 fill in the details required

Once this is done you will have instant access to the Trader's Room! From here, you can open different types of trading and investing accounts:

Trader's Room

After clicking the green button labelled Open Live Account, you can select the account you wish to open. For investing in stocks and ETFs, select Invest.MT5:

Open Live Account

From here, you can begin the application process for your Invest.MT5 account after filling out an application, uploading required documents and going through a verification process. Once this has been done, and your application has been approved, you are ready to download your MetaTrader 5 trading and investing platform.

2. How to download your MetaTrader 5 trading and investing platform

From the Trader's Room homepage, navigate to the bottom and select the MetaTrader 5 for PC or MetaTrader 5 for Mac download links. Alternatively, you could use the MT5 Web Trader platform, allowing you to invest directly from your browser with no download required.

 MetaTrader 5

If you do choose to download a desktop version, simply follow your computer's prompts to complete the download of your MetaTrader 5 platform.

3. Making your first investment from the MetaTrader 5 platform

To make your first investment from the MetaTrader 5 platform, follow these steps:

  1. Open the Market Watch window (Ctrl+M) by selecting View from the menu at the top of the platform.
  2. Right-click in the Market Watch window and select Symbols or press Ctrl+U on your keyboard.
  3. This will then open the window shown below which details all the markets available for you to trade on. From here you can search for the market you wish to trade and then click Show Symbol.

Meta Trader 5 platform

The Admiral Markets MetaTrader trading platform showing the Symbols window.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

After clicking the OK button in the Symbols window you can now view the different instruments in the Market Watch window. To view a price chart of an instrument, simply left-click on the symbol in the Market Watch window and drag it onto the chart area. From here you can now open up a trading ticket.

  1. Right-click on the chart.
  2. Select Trading, then New Order, or press F9 on your keyboard.
  3. A trading ticket will open. Input your entry price, stop loss and take profit levels and your share trading size (volume).

MetaTrader 5 trading platform

An example of the MetaTrader 5 trading platform provided by Admiral Markets, showing a trading ticket window.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and do not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

To learn more about the MetaTrader 5 trading platform, feel free to watch the video below:

Why invest in SPDR ETFs with Admiral Markets?

If you are considering investing in SPDR ETFs or would like to invest in other stocks and ETFs from around the world, you may consider the Invest.MT5 account where you can enjoy benefits such as:

  • The ability to invest in thousands of stocks and ETFs from 15 of the largest stock exchanges in the world.
  • Open an account with just €1 minimum deposit and invest from just $0.01 per share with minimum transaction fees of just $1 on US stocks.
  • Receive free real-time market data, with no delays, at no extra cost.
  • Create a stream of passive income by collecting dividend payouts.
  • Use the world's most popular multi-asset class trading platform, MetaTrader 5.

Alternatively, you could open a Trade.MT5 demo account to speculate on the price direction of SPDR ETFs using CFDs ( Contracts for Difference). This product allows you to potentially profit from rising and falling markets by trading long or short. With Admiral Markets you can open a demo for free and trade in a virtual environment until you feel confident to go live. Click on the banner below to open your free demo trading account:

Trade With A FREE Demo Trading Account

About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.