SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : S&P500 Index changes - Guessing game, news and stories
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Berry Picker who wrote (6)4/5/2010 8:18:47 PM
From: Gordon Quickstad  Read Replies (1) of 19
 
This is the only thread I could find on the S&P500. I just finished a bit of "research" about the S&P500 that I found interesting. I was interested in how it is used as a benchmark for other investments. It's common knowledge that dividends make up a very large portion of the index's return over time.

" A recent study calculates that during the entire 20th century, fully 61% of the U.S. stock market’s 6.7% annual return came from dividends. " (from the CEO of Berkeley Capital Management several years ago)

I had assumed that the ^GSPC, SPX, etc. (different symbols for the same thing) included dividends, but no, it's only an index for the underlying stock pricing data. I guess it stood to reason since it is updated continually throughout the day and dividends come in intermittantly. The index that reflects the true return of the S&P500 is the total return index and this is calculated after the end of trading each day much like a mutual fund. Well, that means that this commonly published index (SPX, ^GSPC) doesn't have much meaning to me for comparison use since I look for dividend paying investments and I like to compare their returns to the total return of the S&P500.

It turns out that the "S&P500 total return index" is the one that actually includes the 61% dividend component mentioned above) and it is hard to find. You can get it by subscribing to data feeds that include it but Yahoo and Google finance don't have it available. However, I did find it for free at Bloomberg dot com in a historical chart that includes current value and the chart also goes back for several years history. The symbol on Bloomberg is "SPTR".

So, if you calculate S&P500 return from the commonly published figure you are not seeing any dividend performance and you'll be a couple of percentage points shy of its actual total return.

As an aside, if you buy the ishares S&P500 index fund (IVV) you will find the IVV pricing tracks the commonly available S&P500 price index virtually perfectly (at a price level approximately 1/10 of the S&P500. But the IVV will pay out the equivalent S&P500 dividends on a quarterly basis. So the IVV total return will virtually give the same total return as the S&P500 total return. Right now the IVV yield is about 1.87%.

I don't know if it's a common practice, but beware if any investments use just the S&P500 price index to compare their performance with. They will being using a number that gives them an easier target to match. They should be comparing to the total return of the S&P500 (symbol SPTR) which will be almost 2% per year higher.

Now I haven't researched to see if the DJIA also has a total return index and what its symbol would be and how available it is if it does.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News