Long term hold e mini 500 or SPY

Discussion in 'Financial Futures' started by Jason11111111, Sep 9, 2019.

  1. What's the differences between the 2?
    Which is better?
  2. ph1l


    E-mini S&P 500 futures contract expires 9:30 a.m. ET on the 3rd Friday of the contract month. So holding long-term means you would need to rollover contracts.

    SPY SPDR S&P 500 ETF trades like a stock (pays dividends) and does not expire.

    VOO Vanguard S&P 500 ETF


    IVV iShares Core S&P 500 ETF

    also don't expire and have lower expense ratios than SPY, so they might be better for long-term holding.
  3. It depends! Are you an American resident?
  4. MattZ

    MattZ Sponsor

    If you intend to hold an asset like Futures long term, make sure it is as close as possible to the notional value of your entry. This is my opinion.
  5. Robert Morse

    Robert Morse Sponsor

    Assuming you are subject to US taxes, and you hold for more than 1 year, and the trade is profitable, and you do not borrow to buy the SPY, the SPY would be better from a tax standpoint. 100% would be the long term cap gain rate. You will receive Dividends. ES futures are currently 1256 contracts which are 60% long term cap gain and 40% short term. The ES future would allow you to control more notional assets for a smaller investment with no borrowing charge.

    There just is no best that is best for all.
    Overnight and Jason11111111 like this.

  6. I'm not US resident. My country happen to have capital gain exemption for US trading/investment.
    30% tax on dividend.

    my thesis is holding ES doesn't not require upfront payment of the contract, thus the cash in my broker is entitled to interest , which is around 1.7%(no interest income tax) about the same as SPY dividend 1.82%( before 30% dividend tax).
    Or I could be using the cash to purchase T-bill 5 years, which is also tax free.
    Last edited: Sep 10, 2019
  7. Thanks. I'll look into the comparison .

    For discussion on this thread we will use SPY ,voo,ivv as same to compare core differences between the spy etf vs /es.
  8. cvds16


    the dividend of sp500 is calculated into the emini (or micro) contract so you won't miss out on that.
    Jason11111111 and trader99 like this.
  9. A non-US resident needs to pay withholding tax on dividends and coupons payments. That will be the case in SPY dividends.
    ES doesn't have this issue as dividends are included in the price (No payments!). Though, you will have to pay financing cost (also included in the price) but you can invest your cash - the future margin required. Typically you want short term bonds with no coupon but discount to face value to not pay the withholding tax so you can compensate for your futures financing cost.
    Jason11111111 likes this.
  10. Overnight


    One of them you HAVE to roll, the other you do not. And being forced to roll (take a huge loss if you are down) on an item can have severe consequences on your psyche, and bankroll. Meanwhile, all the other bits? No expiration, let it recover.
    #10     Sep 10, 2019