For retirement investors seeking long-term growth through broad U.S. market exposure, the State Street® SPDR® S&P 500® ETF Trust (SPY) offers instant diversification in 500 of the largest U.S. companies.
What is State Street SPDR S&P 500 ETF Trust (SPY)?
SPY is an exchange-traded fund (ETF) that tracks the S&P 500 Index, giving investors exposure to 500 of the largest publicly traded U.S. companies. SPY was the first ETF listed in the United States and is the most heavily traded ETF in the world.1
Since its launch in 1993 by State Street, SPY has become a widely recognized ETF that can play a key role in building a diversified portfolio for your future retirement. But is SPY the right choice for your retirement portfolio?
How it works
When you buy one share of SPY, you own a tiny slice of all 500 companies in the S&P 500 Index. The fund's value rises and falls with the collective performance of these companies, weighted by their market capitalization (larger companies have more influence on the fund's performance).
Using SPY in Your Retirement Strategy
1. Diversification Made Simple
Instead of picking individual stocks, SPY gives you exposure to a broad range of sectors, from technology and healthcare to finance and consumer goods. Within a retirement portfolio, it can serve as one component that helps spread risk across multiple areas of the market.
2. Low-Cost Investing
Most ETFs, including SPY, are passively managed, which keeps management fees and operating expenses low compared with many mutual funds. This means a smaller portion of your investment goes toward fees, helping your retirement savings grow more efficiently.
3. Increased Transparency
ETFs like SPY provide greater transparency than many other investment options. Holdings are disclosed regularly, giving investors a clear view of what’s in their portfolio and helping them track how their retirement investments are performing.
What’s Inside SPY?
SPY mirrors the S&P 500 index, so its holdings are weighted according to each company's market capitalization. This means larger companies like Apple, Microsoft, and Amazon make up a more significant portion of the ETF. Currently, the top sectors include2 :
Information Technology: 34.43%
Financials: 13.40%
Communication Services: 10.58%
Consumer Discretionary: 10.41%
Health Care: 9.59%
SPY and Long-Term Growth
SPY is well-suited for long-term retirement investing. Historically, the S&P 500 has delivered average annual returns of around 10%, which can help your retirement savings grow steadily over time3. While past performance doesn't predict future results, SPY's track record reflects the S&P 500's long-term growth potential.
By investing regularly and staying invested for the long-term, you can take advantage of compound interest, where your earnings generate additional earnings.
While SPY offers many advantages, it's essential to consider:
Market Risk: As an ETF, SPY's value can fluctuate with the stock market. It's subject to the ups and downs of the economy and the performance of the underlying stocks.
Inflation Risk: Rising prices can erode the value of your investment over time.
Credit Risk: If one or more companies in the SPY portfolio experience financial difficulties or bankruptcy, it could reduce the ETF’s value.
Liquidity Risk: SPY is highly liquid, but extreme market conditions could make it harder to buy or sell shares when desired.4
Lack of International Exposure: SPY invests only in U.S. companies, so it reflects the performance of the U.S. economy.
Build Your Retirement with SPY and PensionBee
SPY offers a straightforward, cost-effective way to invest in the U.S. stock market, making it a practical foundation for retirement planning. Whether you’re starting to build your retirement savings or looking to consolidate existing accounts, PensionBee and SPY offer:
Broad market diversification
Low investment costs
Long-term growth potential tied to the U.S. economy
High liquidity and transparency
That's why SPY is at the heart of most PensionBee investment portfolios, giving you professional-grade investing powered by State Street.
Watch this SPY & MDY Overview
Simplify Your Retirement Planning with PensionBee
To make retirement planning even simpler, PensionBee helps you consolidate all your old 401(k)s and IRAs into one transparent account so you can see exactly where you stand.
Many rollovers happen automatically, but if yours needs extra attention, our personal rollover managers (called BeeKeepers) guide you through every step. With five investment portfolios built with ETFs powered by State Street, you can keep your focus on growing your savings and preparing for the retirement you want.
Footnotes
Bloomberg Finance, L.P., as of January 31, 2026.
As of 31 December 2025.
Bloomberg Finance, L.P, as of July 3, 2025, based on the S&P 500 Total Return Index for the period September 11, 1989 (inception) through June 30, 2025. The performance data quoted represents past performance. Past performance does not guarantee future results.
Bloomberg Finance, L.P., as of December 31, 2025. Average 30-day notional dollar trading volume used to determine liquidity. Average shares traded based on average of trailing 12-month daily shares traded.
Important Risk Information
State Street Global Advisors (SSGA) is now State Street Investment Management. Please click here for more information.
Investing involves risk including the risk of loss of principal.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Investment Management’s express written consent.
All information is from State Street Investment Management unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.
Passively managed funds invest by sampling the index, holding a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns.
Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
Intellectual Property Information: The S&P 500® Index is a product of S&P Dow Jones Indices LLC or its affiliates (“S&P DJI”) and have been licensed for use by State Street Investment Management. S&P®, SPDR®, S&P 500®, US 500 and the 500 are trademarks of Standard & Poor’s Financial Services LLC (“S&P”); and these trademarks have been licensed for use by S&P DJI and sublicensed for certain purposes by State Street Investment Management. The fund is not sponsored, endorsed, sold or promoted by S&P DJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of these indices.
ALPS Distributors, Inc., member FINRA, is distributor for State Street® SPDR® S&P 500®, State Street® SPDR® S&P MidCap 400® and SPDR® Dow Jones Industrial Average, all unit investment trusts. ALPS Distributors, Inc. is not affiliated with State Street Global Advisors Funds Distributors, LLC.
Before investing, consider the funds’ investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus which contains this and other information, call 1-866-787-2257 or visit www.statestreet.com/im. Read it carefully.
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Your investment is at risk. Past performance is no guarantee of future results. Not bank guaranteed. Not FDIC insured.
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1 - This PensionBee customer received a one time cash payment for their testimonial.
Options on Rollovers A rollover is not your only option for an old 401(k) or IRA, you may alternatively decide to leave your assets with your former employer, rollover your plan to a new employer or to cash in your old plan with the resulting tax penalties applied. PensionBee Inc. does not provide tax advice or individual recommendations as to which of these options is most appropriate for your individual circumstances. To understand the implications of each of the options available to you and help you decide between them you may wish to consult a tax professional who has knowledge of your individual circumstances. For more information see FINRA - Retirement Accounts.
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The SPDR® S&P500 ETF®, SPDR® S&P MIDCAP 400® ETF, SPDR® Dow Jones Industrial Average ETF are exchange traded funds with the investment objective to correspond to the price and yield performance of the S&P 500® Index, S&P®MidCap 400®IndexTM and Dow Jones Industrial AverageSM. The shares of the SPDR® S&P 500® ETF, S&P MIDCAP 400® ETF, SPDR® Dow Jones® Industrial Average ETF represent individual ownership interest in the Trust’s portfolio.
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