Spiders, Vipers and Diamonds: Some Investing Lingo

I’ve heard people from different industries talk about how many acronyms they have to put up with, and I’ll put forth that there can’t possibly be an industry with more acronyms, short forms, nicknames, etc. than the financial services! Here are three colloquialisms relating to indexing products:

‘Spiders’ aka SPDRs: Standard & Poor’s Depositary Receipt

This is an exchange traded fund that tracks the S&P500 index – Gross Expense Ratio is 0.10%. These days, the term ‘spiders’ also refer to the depositary receipts that track specific sectors within the S&P500 – for example, you can hold a spider that tracks:

Consumer Discretionaries
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Technology
Utilities

The average expense ratio for spiders that track individual sectors is 0.23%. 

‘Vipers’ aka VIPRs: Vanguard Index Participation Receipts

Basically the same thing except these ETFs are actually a new share class of existing Vanguard Funds’ Index Mutual Funds. For Canadians who cannot actually buy American mutual funds, you can instead buy these ETFs to take advantage of the lower expense ratios of American index mutual funds (note you’ll pay stock transaction commissions since they trade like stocks). The expense ratio starts from a rock-bottom 0.07% (Vanguard Total Stock Market ETF – note this covers more than the 500 stocks of the S&P500 index, rather it holds the top 1,200 or so stocks in the U.S. market). Expense ratios for Vanguard Sector ETF’s is 0.25%. (Other Vanguard ETFs have higher expense ratios – for example foreign market ETFs.)

‘Diamonds’ aka Diamonds Trust Series 1

This one doesn’t have such a clear link between the short form name (since there really isn’t one) and the nickname like VIPRs and SPDRs do. This investment tracks the performance of the Dow Jones Industrial Average. The expense ratio is 0.18%. (Note – reader Potato alluded that ‘Diamonds’ came from DIA which stands for Dow Industrial Average.)

As always, make sure to speak to a qualified financial advisor if you have any questions.