SPDR Portfolio S&P 500 Growth ETF SPYG constructs a market-cap-weighted portfolio of fast-growing U.S. large-cap stocks with a low fee. Despite being top-heavy, the fund accurately represents the large-cap growth opportunity set and comes with a fee advantage that should translate into sound category-relative performance. It earns a Morningstar Analyst Rating of Silver.

This exchange-traded fund replicates the S&P 500 Growth Index, which selects faster-growing large-cap stocks and weights them by market cap. Its holdings tend to be established growth companies with durable competitive advantages. These firms may not be able to grow as quickly as their smaller counterparts, but they are more stable. But these firms may not live up to the expectations embedded in their higher valuations, which could hurt performance.

U.S. large-cap stocks attract liquidity and widespread attention, such that new information is quickly reflected in prices. Market-cap weighting is a sensible approach here. It harnesses the market’s collective wisdom of the relative value of each holding.

The fund accurately mimics the contours of its average peer. The fund's sector allocations did not deviate by more than 7% from the category average, as of March 2023. However, the fund’s December 2022 rebalance resulted in added exposure to energy at the expense of its allocation to technology stocks, after they tumbled in 2022. Index providers’ different approaches to growth have led to a divergence in portfolios of historically similar growth ETFs. The recent changes do not change our long-term expectations, but it bears monitoring. 

The fund trades at a similar valuation as its typical peer. Despite its top-heavy portfolio, the fund still has a lower average market cap than the category average. Furthermore, the fund includes blend stocks that help diversify the fund along the value-growth spectrum. These stocks can aid its performance when growth stocks underperform.

Analyst Rating

Cheap Exposure to Growth

Associate Analyst

Mo'ath Almahasneh

Microsoft

Apple

NVIDIA

Amazon

Alphabet

Eli Lilly

Broadcom

Tesla

This market-cap-weighted portfolio accurately represents the large-growth opportunity set and effectively channels the market’s collective wisdom to weight holdings. It earns an Above Average Process Pillar rating.

This fund tracks the S&P 500 Growth Index, which starts by calculating a value-growth composite score for each stock in the S&P 500. The growth score is based on stocks’ 12-month price change, three-year sales per share growth, and three-year change in earnings yield per share. Then, each stock is assigned into either the S&P Value or S&P 500 Growth index. Stocks exhibiting less-pronounced growth or value traits are then allocated to each index based on the relative strength of their traits until each index reaches half of the S&P 500 market cap. The index weights stocks by market cap and implements value-growth score buffers to limit turnover. The index is reconstituted annually.

Above Average

Process

This portfolio is managed by SSGA’s Global Equity Beta Solutions, the same team that manages State Street’s other equity index funds, under the leadership of Michael Feehily. State Street Global Advisors' GEBS team's global footprint, trading, and risk management processes enable low transaction costs and tight index tracking, supporting an Above Average People Pillar rating.

Michael Feehily, Karl Schneider, and Mark Krivitsky are the named managers on this fund. Feehily is the co-head of the GEBS team. Feehily has been with State Street since 1992 and joined SSGA in 2010.

Schneider is a managing director of SSGA and the deputy head of GEBS for the Americas region. He has been with SSGA since 1997. Krivitsky joined SSGA in 1996 and has been a named manager on this fund since October 2017.

The managers' objectives are to mitigate tracking error, transaction costs, and the tax consequences of their trades. A team of analysts helps the managers effectively track the index by anticipating index changes and corporate actions. The management team’s compensation is tied to index-tracking performance, operational efficiency, and contribution to process improvement, which aligns their interest with investors'. The team is subject to independent risk oversight.

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR Portfolio S&P 500 Growth ETF

SPYG tracks an index of primarily large-cap growth stocks. The index selects companies from the S&P 500 Index based on three growth factors.

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