SPYL vs SPY5 - What to Choose and Why?

--- by D. Petkovski ---

If you’re a new European investor, you’ve probably researched SPYL and SPY5 for your US exposure.

In this post, I’ll explain exactly what’s the difference between the two and give a recommendation.

Table of Contents

SPYL

Ticker symbols: SPYL, SPXL, SPSA; ISIN: IE000XZSV718

SPYL (SPDR S&P 500 UCITS ETF (Acc.)) is an ETF tracking the S&P 500 – an index composed of the largest US companies weighted by market cap.

It has a TER of 0.03% and it’s an accumulating fund (it reinvests the dividends instead of distributing them to investors).

SPY5

Ticker symbols: SPY5, SPX5; ISIN: IE00B6YX5C33

SPYL (SPDR S&P 500 UCITS ETF (Dist.)) is an ETF from the same provider, tracking the the same index, with the same expense ratio.

It has almost all the same characteristics as SPYL. The only difference is that it’s a distributing fund (it pays out the dividends to the shareholders).

SPYL vs SPY5 – My choice

My choice is $SPYL.

And my reasoning is simple: I prefer accumulating to distributing ETFs.

Here are 3 reasons why you should consider this as well:

Dividend distributions are taxable events
Even if you can receive dividends tax free, it still creates an operational burden of reporting them and reinvesting them
Dividends are forced selling – it doesn’t make sense if you’re still building your portfolio instead of living off of it

Remember, dividends don’t materialize into investors’ accounts magically. The cash you receive comes from what could’ve stayed invested instead.

I couldn’t have said it better in my CSPX vs VUSA post:

Why would you like the fund to take out a part of its value in order to give you more cash every quarter?

Cash is what you’re trying to get rid of in the first place – that’s why you’re investing.

Author

D. Petkovski

📓 The Author Husband & Father
Software Engineer StrengthCentric
₿itcoin Hodler Long-Term Investor
🌍 Everything Enthusiast 🔥 Optimist

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