Spiders: Where are the Bugs

Abstract

One of the clearest trends in asset management is the rapid increase in the amount of individual and institutional money invested in indexed products. By far the most popular index that investors want to replicate is the S&P 500 index. While many academic studies have examined the characteristics of two instruments frequently used to replicate the S&P, index funds and futures, very little has been written about the newest way to replicate the S&P 500 index: Standard and Poors Depository Receipts (SDPR) commonly referred to as Spiders. The purpose of this paper is to analyze Spiders and compare them to alternative investments.

Keywords: spiders, index funds, mutual funds, performance