The ETF Secrets Top Pros Use to Build Smarter Portfolios

If you're in the market, you've heard of SPDR ETFs. They are some of the most traded financial instruments on the planet, managed by a titan of the industry. But the game is changing. State Street Global Advisors, the firm that started it all, rebranded to State Street Investment Management in 2025. This isn't just a name change. It signals a strategic shift.

Understanding their core products, especially the original SPY, and where they're headed is no longer optional. It's essential for building a resilient portfolio.

Insights

• State Street Investment Management (formerly SSGA) launched the first US-listed ETF, SPY, making access to the S&P 500 Index broadly available.
• The SPDR ETF lineup covers everything from broad market indexes and specific sectors to fixed income and commodities.
• SPY's unique Unit Investment Trust (UIT) structure has real consequences for dividends and costs compared to rivals like IVV and VOO.
• The SPDR Portfolio suite offers low-cost alternatives to the flagship funds, designed for long-term, buy-and-hold investors.
• You must review key details like expense ratios, trading liquidity, and specific tax rules—like those for the gold ETF GLD—before committing capital.

The Firm Behind the Ticker

State Street Investment Management is the asset management division of State Street Corporation, a global financial behemoth. With nearly $4.1 trillion in assets under management as of the end of 2023, it stands firmly in the "Big Three" of ETF providers, alongside BlackRock's iShares and Vanguard.

The SPDR brand, pronounced "spider," is their family of exchange-traded funds. It all started with a single, transformative idea.

In 1993, the firm launched the SPDR S&P 500 ETF Trust (SPY). This was the first ETF listed in the United States, and it gave any investor the ability to buy or sell the entire S&P 500 index in a single transaction, just like a stock. That product didn't just create a new market. It laid the foundation for modern portfolio construction.

SPY Under the Microscope

The SPDR S&P 500 ETF Trust (SPY) is the flagship fund of the SPDR lineup. Its objective is straightforward. It aims to track the performance of the S&P 500 Index. With assets now topping $500 billion as of September 2025, SPY is one of the largest and most liquid securities in the world.

Its massive daily trading volume and tight bid-ask spreads—the tiny gap between the buying and selling price—make it a favorite for institutional traders and long-term investors alike.

But SPY is different from its main competitors, iShares’ IVV and Vanguard’s VOO. It’s structured as a Unit Investment Trust (UIT). This older structure comes with limitations. SPY cannot reinvest dividends automatically. Instead, it holds them as cash and pays them out to shareholders quarterly. It also doesn't participate in securities lending, a practice where funds lend out their holdings to generate a small amount of extra income.

These details matter. The inability to reinvest dividends can create a slight drag on performance, and its expense ratio is typically a few basis points higher than its rivals. So why do people still use it? Liquidity. For those who need to move large amounts of money quickly and efficiently, SPY's trading infrastructure is hard to beat.

"Strong inflows into Standard & Poor's 500 Index ETFs over the past few years tell a clear tale: Investors have been favoring the S&P 500 for core equity exposure."

David Sharp Director, ETF Capital Markets, Vanguard

Beyond the Flagship: The Rest of the Arsenal

State Street offers a broad range of ETFs designed for various investment goals. Thinking you can just buy SPY and call it a day is a rookie mistake. The real power lies in knowing what other tools are available.

The Select Sector SPDR Funds are a prime example. These 11 ETFs carve up the S&P 500 into its component sectors. You can target Technology (XLK), Financials (XLF), Health Care (XLV), or any other major industry group. This allows for tactical bets on parts of the economy you believe will outperform.

For the cost-sensitive, buy-and-hold crowd, the SPDR Portfolio suite is the answer. Funds like the SPDR Portfolio S&P 500 ETF (SPLG) offer exposure to the same index as SPY but with a much lower expense ratio. The trade-off is typically lower trading volume, but for a long-term investor, that's irrelevant.

In fixed income, funds like the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) function as a place to park cash, while the SPDR Portfolio Aggregate Bond ETF (SPAB) provides diversified exposure to the U.S. bond market.

And then there are commodities. The SPDR Gold Shares (GLD) is one of the largest ETFs backed by physical gold bullion stored in vaults. But here’s the catch most people miss. GLD is structured as a grantor trust. This means any long-term gains are taxed as collectibles at a maximum rate of 28%, not the more favorable long-term capital gains rate. A nasty surprise if you're not prepared.

The Investor's Playbook

Choosing the right ETF requires more than just picking a ticker you've heard of. Here are the basic steps for doing your own due diligence.

Start on the official State Street SPDR ETFs website. Use their tools to find funds that match your criteria. Once you've identified a candidate, dig into the details on its dedicated page. You're looking for a few key metrics.

First, the expense ratio. This is the annual fee. Second, look at Assets Under Management (AUM) and average daily volume. These are proxies for size and liquidity. A fund with billions in AUM and millions of shares traded daily will be easier and cheaper to trade than a small, obscure one.

Check the holdings to see what you're actually buying. Compare the fund's performance against its benchmark index to see if it's doing its job. Finally, review the official Prospectus. Yes, it's dry, but it contains all the critical information on risks, objectives, and fees.

Remember, not all SPDR funds are created equal. The flagship products have high liquidity, but some of the newer or more niche ETFs will have wider spreads and lower volume. And always be aware of the tax implications, especially with commodity funds.

"I see several trends playing out for the ETF market in 2025: The final catalyst is the ongoing adoption of model portfolios, where ETFs (both active and passive) remain one of the most efficient building blocks for strategists to express their portfolio views."

Noel Archard Global Head of ETFs and Portfolio Solutions, AllianceBernstein

Analysis

The rebrand to State Street Investment Management isn't just cosmetic. It reflects a broader war being fought in the asset management space. While SPY remains a cash cow, the firm knows it can't rely on a 30-year-old product forever, especially when competitors offer cheaper alternatives. The launch of the SPDR Portfolio suite was a direct counterattack against the fee compression led by Vanguard and BlackRock.

Now, they're pushing into new territory. The recent launches of actively managed digital asset ETFs with Galaxy Asset Management and the expansion of their AI-driven Kensho suite show they're placing bets on the next generation of investing. They are no longer just an index shop. They are actively competing for assets in thematic and alternative spaces.

Furthermore, the expansion of their proxy voting choice program is a nod to the growing pressure from large institutional clients who want more say in corporate governance. This is a strategic move to retain massive pension and endowment funds that are increasingly focused on ESG mandates. State Street is signaling that it's adapting to a market that demands more than just cheap beta exposure. It's fighting to prove it's as innovative today as it was in 1993.

Final Thoughts

SPDR ETFs are a major component of modern investing, offering a powerful set of tools for nearly any strategy. From the ultra-liquid SPY to specialized sector funds and low-cost core holdings, their lineup is extensive. But powerful tools require a skilled operator.

By understanding the specific structures, costs, and tax rules of these products, you can make smarter, more informed decisions. Whether you are building a diversified portfolio for the long haul or making a tactical move in the market, the key is to look under the hood. Know what you own, why you own it, and how it really works. That's how you win.

Did You Know?

The SPDR S&P 500 ETF (SPY) is so liquid that on an average day, the dollar value of its shares traded often exceeds the entire daily trading volume of the stock markets in many developed countries.