Why is it a good idea to invest in SPDR (ticker: SPY), the ETF that tracks...

Why is it a good idea to invest in SPDR (ticker: SPY), the ETF that tracks the S&P 500 Index?

Expert Solution

It is a good idea to purchase this exchange traded fund because of following reason-

A. This exchange traded fund is completely replicating the standard and poor 500 index so there is no risk related to under performance in relation to the index.

B. This exchange-traded fund is also reflecting the most diversified index in the world because standard and poor 500 is reflective of the value weighting index of top 500 companies in United States of America.

C. The cost of investment will also be lower because it is a passive fund.

D. it will also offer with very high degree of liquidity because it is continuously traded on the stock exchange.

E. It can even be short selled in order to hedge ourself.

So I will be investing in this exchange traded fund because it is offering me with high diversification and higher rate of return in the long run which will not underperform the market rate of return.

jeff jeffy answered 2 years ago

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