A Standard and Poor's Depository Receipt (SPDR) is a unit investment trust that mimics the Standard & Poor's (S&P) 500 Index or represents different pieces of the index. Since it is a trust and not a mutual fund, the tax treatment differs. However, unlike a mutual fund, it trades during the day, which could lead to more favorable prices. An additional consideration is that each transaction typically results in a commission for a registered representative; this is typically not the case with mutual funds. Therefore, SPDRs and other similar exchange-traded funds are usually best suited for large infrequent investment purchases.
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