PAI vs SPY
PAI vs SPY
Western Asset Investment Grade Income Fund Inc. vs State Street SPDR S&P 500 ETF Trust
Quick Verdict
SPY has a lower expense ratio. SPY delivered stronger 1-year returns. SPY offers more diversification with 503 holdings.
Side-by-Side Comparison
| Metric | PAI | SPY | Winner |
|---|---|---|---|
| Expense Ratio | 0.73% | 0.09% | |
| AUM | $123M | $789.1B | |
| Dividend Yield | 4.81% | 1.01% | |
| Holdings | 476 | 505 | |
| YTD Return | -1.82% | +13.50% | |
| 1Y Return | -2.63% | +23.56% | |
| 3Y Return (annualized) | +6.27% | +21.17% | |
| 5Y Return (annualized) | -1.06% | +13.46% | |
| Volatility (annualized) | 12.6% | 15.3% | |
| Max Drawdown | -49.6% | -56.5% | |
| Fund Family | Franklin Templeton Investments (US) | State Street Investment Management | |
| Category | Fixed Income | Equity | |
| Inception | Mar 22, 1973 | Jan 22, 1993 |
PAI vs SPY Performance
Western Asset Investment Grade Income Fund Inc. (PAI) is a ETF from Franklin Templeton Investments (US) and State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management. Over the past year PAI returned -2.63% while SPY returned +23.56%. Year to date, PAI is down 1.82% versus a gain of 13.50% for SPY.
Over three years, PAI compounded at +6.27% per year against +21.17% for SPY; over five years the annualized figures are -1.06% and +13.46% respectively. Across the full 31-year window we track, SPY has the edge at +8.85% annualized vs +0.09%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
SPY has been the more volatile fund, with annualized monthly volatility of 15.3% compared with 12.6% for PAI. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -49.6% for PAI and -56.5% for SPY. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.34. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
PAI charges 0.73% per year while SPY charges 0.09%. On a $10,000 position that is $73 vs $9 annually, a gap of $64 per year that compounds over a long holding period. On income, PAI currently yields 4.81% against 1.01% for SPY.
Holdings Overlap
PAI and SPY share 1 holdings out of 823 unique holdings combined, representing a 0.2% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Top Shared Holdings
| Stock | Weight in PAI | Weight in SPY | Difference |
|---|---|---|---|
| C | 0.21% | 0.38% | 0.17% |
Frequently Asked Questions
Which is cheaper, PAI or SPY?
PAI has an expense ratio of 0.73% while SPY charges 0.09%. SPY is the cheaper option. On a $10,000 investment, that is $64 per year of difference.
Which performed better, PAI or SPY?
Over the past year PAI returned -2.63% vs +23.56% for SPY, so SPY leads on 1-year performance. Over the longest common window we track (31 years), PAI annualized +0.09% vs +8.85% for SPY. Past performance does not guarantee future results.
Which is riskier, PAI or SPY?
SPY has been the more volatile fund at 15.3% annualized versus 12.6% for PAI. Worst drawdown: PAI -49.6% vs SPY -56.5%.
Should I hold both PAI and SPY?
PAI and SPY have a monthly-return correlation of 0.34, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between PAI and SPY?
PAI and SPY share 1 common holdings with a 0.2% weight overlap. Combined, they hold 823 unique securities.
Which pays a higher dividend, PAI or SPY?
PAI yields 4.81% while SPY yields 1.01%, so PAI currently pays the higher dividend yield.
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