SPY Is Still a Unit Investment Trust. Here’s Why That Quirk Matters (and When It Doesn’t)

The State Street SPDR S&P 500 ETF Trust (NYSEARCA:SPY) launched on January 22, 1993. According to State Street Global Advisors, it was “the very first exchange-traded fund listed in the United States.” More than three decades later, it still uses its original legal setup. State Street’s fund page says SPY’s shares “represent ownership in” the trust, “a unit investment trust.”

The word “still” matters because another fellow trust left that format in December 2025. On December 19, 2025, Invesco announced that shareholders of Invesco QQQ Trust (NASDAQ:QQQ) had voted to change it from a unit investment trust ETF to an open-end fund ETF. QQQ started trading as an open-end fund on Monday, December 22. So what does the old structure cost, and when should you care? For most buy-and-hold investors who are close to retirement, fees matter more than the wrapper.

What a Unit Investment Trust Actually Is

A unit investment trust, or UIT, is an older ETF format. The fund runs under the rules written into its trust when it was created. Think of it as a fund that follows a fixed rulebook.

SPY answers to a trustee and a sponsor. State Street Global Advisors lists State Street Global Advisors Trust Company as SPY’s trustee. Most modern ETFs use a different setup, with a board overseeing an investment adviser.

That modern format is the open-end fund. Both the Vanguard S&P 500 ETF (NYSEARCA:VOO) and the iShares Core S&P 500 ETF (NYSEARCA:IVV) are open-end funds.

What QQQ Gained by Leaving the Old Format

Invesco spelled out the benefit. The reclassification “also provides the opportunity for Invesco QQQ to reinvest income and participate in securities lending.”

Reinvesting income means a fund can put the dividends it collects from its stocks back to work right away, without holding them until the next payout. Securities lending means the fund lends shares to other investors, usually short sellers, and collects a fee that can help cover its costs.

SPY still uses the structure QQQ left behind.

QQQ owners also got a fee cut. QQQ’s total expense ratio, the yearly fee charged as a share of your investment, fell from 0.20% to 0.18% with the conversion.

Why the Fee Outweighs the Wrapper for Long-Term Holders

For a buy-and-hold investor, the expense ratio is the bigger and clearer difference. State Street Global Advisors lists SPY’s gross expense ratio at 0.0945%. VOO charges 0.03%, and IVV charges 0.03%. All three track the same S&P 500 index of large U.S. companies.

The combined drag from all of SPY’s costs is also small, and you can see it. As of October 31, 2026, State Street Global Advisors reports SPY’s 10-year annualized return at NAV (net asset value, or what the fund’s holdings are worth per share) at 15.29%, compared with 15.44% for the S&P 500 Index. Those figures assume dividends are reinvested and are shown net of fees. SPY trailed its index by a small margin over the decade. That gap covers every cost the fund carries, and the structure is only one possible part of it.

Traders Stick With SPY for Reasons the Wrapper Can’t Touch

For active traders and options users, SPY’s structure matters less. State Street Global Advisors lists SPY’s 30-day median bid-ask spread at 0.00% as of November 6, 2026. The bid-ask spread is the gap between the highest price buyers will pay and the lowest price sellers will accept. A tighter spread makes it cheaper to get in and out of a position.

SPY supports an active options market. That trading depth is why many active traders and hedgers stick with it, whatever legal format it uses.

Where This Leaves Retirement Savers

For the full cost overview, see our earlier look at how SPY’s trust structure compares with VOO over a decade and our fee breakdown of SPY against two cheaper S&P 500 funds.

SPY’s UIT structure is a real quirk, and QQQ’s move shows that fund companies think it costs something. For a buy-and-hold retirement investor, though, the expense ratio decides the question, and the legal wrapper largely comes second. For a trader who relies on SPY’s options and liquidity, the wrapper matters less. Going forward, the number to check is the expense ratio in each fund’s next prospectus update.

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