FOUR POINTS ADVISORS

Liquidity

The SPDR S&P 500 ETF Trust (SPY) is one of the most popular exchange-traded funds (ETFs) that tracks the performance of the S&P 500 index. 

As of April 27, 2023, the average daily trading volume for SPY over the past three months was approximately 69.4 million shares, and the bid-ask spread for SPY was approximately $0.01, which is a very narrow spread. 

This indicates that there is generally a high level of liquidity and trading activity for this ETF, which is not surprising given that it is one of the largest and most widely traded ETFs in the world.

SPY does not pay a fixed dividend, but rather distributes dividends based on the dividends paid by the underlying stocks in its portfolio.

The dividend yield for SPY can vary based on a variety of factors, such as the dividend policies of the companies held in its portfolio and the overall market conditions. As of April 27, 2023, the dividend yield for SPY was approximately 1.21%.

Longevity

The S&P 500 index was created on March 4, 1957. It was developed by Standard & Poor's (now S&P Global) and is now one of the most widely recognized benchmarks for the U.S. stock market.

The S&P 500 index is a market-capitalization-weighted index that includes 500 large-cap stocks from various sectors of the U.S. economy. It is designed to provide investors with a broad view of the overall performance of the U.S. stock market, and is often used as a benchmark for measuring the performance of individual stocks, mutual funds, and exchange-traded funds (ETFs).

Since its creation, the S&P 500 index has become an important indicator of the health and direction of the U.S. economy, and is closely watched by investors, analysts, and policymakers around the world.

In general, stocks listed in the S&P 500 tend to be larger, more established companies with a track record of stable earnings growth and market capitalization. However, companies can be added to or removed from the index on a regular basis, based on a set of predefined criteria established by the S&P Dow Jones Indices.

To be included in the S&P 500, a stock must meet certain requirements, such as a minimum market capitalization, liquidity, and financial viability. Stocks that no longer meet these criteria may be removed from the index and replaced with other stocks that meet the requirements.

According to a study by S&P Dow Jones Indices, the average tenure of companies in the S&P 500 has been decreasing over time. In 1964, the average tenure was 33 years, whereas in 2018, the average tenure was just 24 years.  

In comparison, according to a study by Statista, the average lifespan of a company listed on the NASDAQ exchange was only about 7.5 years as of 2019. 

Benefits to holding SPY compared to individual stocks include:

1. Diversification: SPY holds a portfolio of 500 large-cap U.S. companies across multiple industries, which provides investors with a high level of diversification. This means that even if a few individual stocks in the portfolio underperform, the impact on the overall investment can be mitigated by the strong performance of other stocks in the portfolio.

2. Cost-effective: Investing in individual stocks can be expensive, as investors may need to pay brokerage fees, research costs, and other expenses. By contrast, ETFs like SPY can offer a cost-effective way to gain exposure to a broad range of stocks with a single investment.

3. Liquidity: ETFs like SPY are typically highly liquid, which means that investors can buy and sell shares at any time during market hours. This can be especially important for investors who need to quickly and easily adjust their portfolio holdings.

4. Exposure to the market: By investing in SPY, investors can gain exposure to the broader U.S. stock market and benefit from the overall growth and stability of the market. This can be particularly beneficial for investors who may not have the time or expertise to conduct in-depth research on individual companies.

5. Ease of trading: Trading individual stocks can be time-consuming and complex, as investors may need to monitor market conditions and company-specific news on a regular basis. By contrast, ETFs like SPY can be traded just like a stock, which can make it easier and more convenient for investors to buy and sell shares.