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  Monday January 21, 2019

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Learn even more about this topic with the Encyclopedia of Personal Finance

Spider is a term derived from the abbreviation SPDR, for Standard & Poor's Depository Receipts.

A spider is a share in a unit investment trust that owns stock in all of the companies that make up the Standard & Poor's 500 (S&P 500), an index of 500 publicly traded industrial, financial, utility, and transportation stocks. The S&P 500 is often used as a performance indicator for the entire market, since it comprises a large percentage of the total value of U.S. equities. Spiders allow the investor to own a stake in 500 of the largest companies in the United States with just one transaction. They are actively traded on the American Stock Exchange under the ticker symbol "SPY."

Spiders closely track the performance of the S&P 500, so that when the index goes up, the value of spiders also increases. In addition to regular SPDRs, you can also buy shares in MidCap SPDRs and Select Sector SPDRs, which function in the same way for selected companies in the S&P 500.

MidCap SPDRs, for instance, are based on the common stocks that make up the S&P MidCap 400 Index, which comprises 400 medium-sized U.S. companies.

Select Sector SPDRs offer nine different investment opportunities in different sectors of the economy. These Select Sector SPDRs provide you with the opportunity to own shares of various companies that participate in the same sector. The nine sectors offered are listed below with their ticker symbols:

Basic Industries Sector XLB
Consumer Services Sector XLV
Consumer Staples Sector XLP
Cyclicals/Transportation XLY
Energy Sector XLE
Financial Sector XLF
Industrial Sector XLI
Technology Sector XLK
Utilities Sector XLU

All of the companies in each of these sectors are also present in the S&P 500. All of these spiders are actively traded on the American Stock Exchange.

While Spiders track the S&P 500, DIAMONDS emulate the Dow Jones Industrial Average. Keep reading to learn more about this relatively new financial product.


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