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Maybe we haven't gone around on this enough. SPY does have an annual expense ratio similar to the Vanguard Index 500 (.19%)

"A SPDR also entitles its holder to receive proportionate quarterly cash distributions corresponding to the dividends which accrue to the S&P 500 stocks in the underlying portfolio, less Trust expenses. Expenses for the SPDR Trust are anticipated to be among the lowest for investments of this type, currently at 18.45 basis points (0.185%)"

You have to do very little trading, have minimal trading fees, or have massive amounts invested to beat a low fee index fund when the SPY annual fees are nearly the same as those in the fund.

SPY is great if you are actively trading in and out of the market. I am sort of a buy and hold guy so I'm sticking with an index fund.
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