There is a little-known built-in profitability niche for arbitrage experts with lots of cash, but AMEX specifically refrains from this activity. [In a previous version of this article we mistakenly said AMEX also participated]. The arbitrageur can create and sell new SPDRs in blocks of 50,000 shares when they are selling at a premium and buy back and unwind them when they are selling at a discount. The profits from this arbitrage activity are unknown. On the other hand, this keeps the instrument stable.

Technically, SPDRs give the investor an ownership interest in a Trust established by AMEX where stocks purchased with the investor's money are held.

The plain vanilla and mid-cap versions and Diamonds are comparable to index funds, the sector SPDRs are a bit pricey for any large cap index. [In a previous version of this article I mistakenly criticized Diamonds for high expense ratios].

There are two costs to SPDRs: costs to buy and sell them (like any stock), and costs to operate them.

Purchasing a block of SPDRs can cost as little as $10 at an online discount brokerage, which amortized over time or over a large account is insignificant. But for a very small portfolio held only a short time, $10 in and $10 out will have some effect.

In addition, the following are estimated annual operating expenses based on recent history:

AMEX actually ran up much higher expenses in starting up Diamonds but did not pass them on to investors [correction from previous version of this article.]
                   

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