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Will The SPY ETF Reach $500 By 2022?

December 24, 2020 9:35 am
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Will The SPY ETF Reach $500 By 2022?

Every week, Benzinga conducts a sentiment survey to find out what traders are most excited about, interested in or thinking about as they manage and build their personal portfolios.

We surveyed a group of over 500 investors on whether the SPDR S&P 500 ETF Trust (NASDAQ:SPY) will reach $500 by 2022.

What Are ETFs?

ETF stands for exchange-traded funds. An ETF is an investment fund that trades on a stock exchange along with stocks for individual companies. 

ETFs track a sector, represent a commodity (like gold, oil or wheat) or sample a basket of stocks or bonds that meet a given criteria.

The SPY ETF tracks the S&P 500. Exchange-traded funds are popular with investors given they can help mitigate risk in your portfolio.

Tesla S&P Inclusion

If you’re concerned the inclusion of Tesla Inc (NASDAQ:TSLA) into the S&P 500 could destabilize the SPY ETF as a whole, consider the EV company represents only 1.6% overall weighting for the index fund.

Benzinga recently reported that in a worst-case scenario in which Tesla gives up all its gains from the past two years, it would represent about 90% downside for the stock. At a 1.6% overall weighting for Tesla, that 90% downside would still only translate to a 1.44% decline for the S&P 500.

SPY Forecast 2021

Nearly 60% of Benzinga traders and investors told us the SPY ETF would reach $500 by the end of next year. Those who participated in our study said SPY will see strength given the belief the US economy will significantly recover in 2021 and tech stocks will out-perform markets in 2021.

As an index fund SPY is indeed tech-dependent- roughly one-third of represented companies in SPY are in the tech sector. Respondents to our study also believe consumer discretionary spending will increase in sympathy with an improving U.S. economy in 2021, led by tech giants Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN).

Taking a look at SPY’s weighted average by market capitalization, the three FAANMG companies represent about 17% of the ETF’s market cap as of publishing.

See Also: Blue Chip Stocks.

This survey was conducted by Benzinga in December 2020 and included the responses of a diverse population of adults 18 or older.

Opting into the survey was completely voluntary, with no incentives offered to potential respondents. The study reflects results from over 500 adults.


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