Investors see S&P 500 index rallying 10% or more this year; how you can gain from this rally by buying ETFs

By: |
July 26, 2021 3:40 PM

Fund managers are bullish on S&P 500 index, and see it rallying at least 10 per cent by the end of this year 2021.

S&P 500, ETFs, US stocksThe S&P 500 index has zoomed 19.22 per cent so far this year, from 3,700 points in January. Image: Reuters

Fund managers are bullish on S&P 500 index, and see it rallying at least 10 per cent by the end of this year 2021. The S&P 500 index has zoomed 19.22 per cent so far this year, from 3,700 points in January. The benchmark US stocks index last closed at 4,411.79 points, up 1.01 per cent from the previous close. Bank of America’s July fund manager survey found that 82 per cent investors expect at least a 10% rally in the S&P 500 index, with some even expecting a bull market in the next six months. In comparison, India’s Nifty 50 index has jumped 12.86 per cent so far this year.

Also read: How to invest in Apple, Amazon, Google, other US stocks from India: All you need to know

Investing in S&P 500 via ETFs

Investors hoping to gain from the growth in S&P 500 index can invest by buying any S&P 500 ETF. The S&P 500 ETFs track the S&P 500 index, which comprises the top 500 stocks listed on the New York Stock Exchange. ETFs mostly mirror the movement in the underlying index, subject to a tracking error. Here are the top ETFs tracking the S&P 500 index:

– Vanguard S&P 500 ETF
– SPDR S&P 500 ETF Trust
– iShares Core S&P 500 ETF

Three largest S&P 500 ETFs: Vanguard S&P 500, SPDR S&P 500, iShares Core S&P 500

Vanguard S&P 500 ETF is the largest S&P 500 ETF with net assets worth $753.41 billion. Its average volume is at 3.98 million. On a year-to-date (YTD) basis, it has soared 19.27 per cent, from $339.03 at the beginning of January 2021.

SPDR S&P 500 ETF Trust is the second-largest S&P 500 ETF, with net assets at $374.03 billion. As of last trade, it ended 1.03 per cent higher at $439.94. So far in the year, it has risen 19.29 per cent. SPDR S&P 500 ETF is the very first exchange-traded fund listed in the United States, and was launched in January 1993.

iShares Core S&P 500 ETF has net assets of $286.99 billion, making it the third-largest S&P 500 ETF. It has surged 19.32 per cent, so far in the year, rising from $370.22 to $441.76. The average volumes stood at 4.53 million.

Other than these top ETFs, there are several variants by other AMCs, such as leveraged, equal-weighted, etc. ETFs can be bought or sold only on a stock exchange anytime during trading hours, through ETF brokers. Similar to stocks, they have their specific ticker symbol. Some of the top stocks of the S&P 500 index are Microsoft, Apple, Amazon, Facebook, Google, Berkshire Hathaway (BRK.A), among others. ETFs help investors to get the live prices as trading happens during the market hours and the cost of owning them is considerably low.

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