Dear VOO and SPY ETF investors: Buy IBIT and FBTC too

on Feb 21, 2024
  • The S&P 500 index has been one of the best indices ever.
  • A $1000 invested in the index in 1928 would be worth over $200k today.
  • A case can be made for allocating some cash to Bitcoin ETFs too.

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The Vanguard S&P 500 ETF (VOO) and SPDR S&P 500 ETF (SPY) are some of Wall Street’s most popular and successful funds. SPY, the oldest ETF in the world, has grown its total assets to over $490 billion, making it the biggest in the industry. VOO is a similar ETF that tracks the S&P 500 and has almost $300 billion in assets.

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The case for VOO and SPY

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The S&P 500 index has been one of the best-performing assets in history. As shown below, while the index has dropped sharply in some years, most recently in 2022, its overall trend has been positive since its inception. 

Annual S&P 500 index returns

The average price of the S&P 500 index in 1928 was just $19. As such, if someone invested just $1,000 in the index back then, they would have received 52 shares, which would now be worth over $263k. The real figure would be much higher than that when you include dividends.

The VOO and SPY ETFs have done well because of the strong performance of the S&P 500 index over the years. Besides, this index is made up of all the biggest companies in the US like Microsoft, Apple, Nvidia, Meta Platforms, Nvidia, and Berkshire Hathaway. Combined, the six biggest companies in the funds have a market cap of over $12 trillion or 44% of the US GDP.

Therefore, while the past is hard to predict, many analysts believe that the S&P 500 index and its ETFs will continue doing well over time. Besides, it houses the most innovative companies in the world.

Also, many international investors, including from America’s foes like China, are moving to US equities as their domestic markets tumble. 

Further, data by FactSet show that earnings growth is expected to pick up as companies embrace the year of efficiency. Most recently, some big companies like PayPal, Nike, and Cisco have all announced job cuts.

IBIT and FBTC are good ETFs too

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There are three reasons why S&P 500 index investors should consider investing in the iShares Bitcoin ETF (IBIT) and the Fidelity Wise Origin Bitcoin ETF (FBTC). First, historically, Bitcoin has done much better than the S&P 500 index. Bitcoin has jumped from near zero in 2009 to over $52,000 today and in my estimation, I believe that it will jump to $69,000 ahead of halving.

Bitcoin’s strong performance happened in a tumultuous period that saw the collapse of key players in the industry like Mt.Gox, FTX, Celsius, and Voyager Digital. It also happened amid persistent regulatory crackdown in key countries like China, United States, and India. 

Most importantly, the recent’s Bitcoin surge happened because of retail traders as institutional investors kept off. Now, with institutional capital flowing in, there is a likelihood that the price will continue thriving over time.

The other reason why VOO and SPY investors should consider IBIT and FTBC is that there is demand for alternative assets in the market today. This explains why private equity companies like Blackstone and Brookfield Asset Management are thriving.

Therefore, allocating some cash in FTBC and IBIT may be a good way to complement the income generated by the VOO or the SPY ETF.


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