SPYL - Best S&P 500 ETF for non-US Investors

Investors like S&P 500 ETFs, and its no surprise as they offer diversified exposure to the US stock market, which has a proven track record of delivering strong returns to investors.

However, which ETF should we choose since they offer the same exposure (tracking the S&P 500 index)? Let me explain why SPYL is the best S&P 500 ETF in the market right now (for non-US investors)!

What is SPYL?

SPYL is the exchange ticker for SPDR® S&P® 500 UCITS ETF (Acc), which tracks the S&P 500 index.

Why SPYL?

1. Irish Domiciled

   With a US domiciled ETF such as VOO, a 30% withholding tax applies. With a Irish domiciled ETF such as SPYL, the US-Ireland tax treaty applies, reducing the withholding tax rate to 15%. So all things being equal, you should pick an ETF that has a lower withholding tax rate, as that affects your returns.

   The US also levies an estate tax, which is a tax on all your assets located in the US when you pass on. Irish domiciled ETFs are exempted from US estate taxes. If you plan to invest long term and hope to pass on your portfolio to your dependents without an expensive tax bill, then you should definitely pick Irish domiciled ETFs.

2. Accumulating

   Accumulating ETFs automatically reinvest the dividends received. Instead of having dividends paid out to you and having to reinvest manually through a broker (incurring additional costs), accumulating ETFs (such as SPYL) help you with the reinvestment for free.

3. Low Cost

   SPYL has the lowest expense ratio compared to other popular Irish domiciled ETFs such as CSPX and VUAA.

Summary

SPYL comes out way ahead of several popular ETFs, such as VOO, CSPX and VUSD by being the lowest cost, Irish domiciled, and accumulating ETF.

Things to take note

SPYL is a relatively new ETF and this fund was only incepted October 2023. What this means is that bid-ask spreads may be wide, and there may be some liquidity issues etc. However, as of now (the date when the post was published), the spreads are comparable to other popular ETFs, and the liquidity and bid-ask spreads of this ETF should improve over time as more money gets invested (the AUM grows).

As mentioned earlier, this ETF is very new, and it is so new that there isn't a history of the performance, so we do not know how well this ETF tracks the index. Given that it is State Street that is managing the ETF, I'm sure the tracking error will be tiny but do pay attention to it.

Conclusion

SPYL is a relatively new ETF that tracks the S&P 500 index. As investors, we have no control over the returns, but what we can do is to invest in the lowest cost product. Hence, this makes SPYL the best S&P 500 ETF.