HFRO vs SPY
Highland Opportunities and Income Fund vs State Street SPDR S&P 500 ETF Trust
Quick Verdict
SPY has a lower expense ratio. HFRO delivered stronger 1-year returns. SPY offers more diversification with 503 holdings.
Side-by-Side Comparison
| Metric | HFRO | SPY | Winner |
|---|---|---|---|
| Expense Ratio | 1.18% | 0.09% | |
| AUM | $650M | $789.1B | |
| Dividend Yield | 3.91% | 1.01% | |
| Holdings | 64 | 505 | |
| YTD Return | +26.15% | +13.39% | |
| 1Y Return | +30.54% | +22.52% | |
| 3Y Return (annualized) | +3.62% | +21.36% | |
| 5Y Return (annualized) | +0.75% | +13.19% | |
| Volatility (annualized) | 25.0% | 15.3% | |
| Max Drawdown | -60.5% | -56.5% | |
| Fund Family | NexPoint | State Street Investment Management | |
| Category | Fixed Income | Equity | |
| Inception | Jan 13, 2000 | Jan 22, 1993 |
HFRO vs SPY Performance
Highland Opportunities and Income Fund (HFRO) is a ETF from NexPoint and State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management. Over the past year HFRO returned +30.54% while SPY returned +22.52%. Year to date, HFRO is up 26.15% versus a gain of 13.39% for SPY.
Over three years, HFRO compounded at +3.62% per year against +21.36% for SPY; over five years the annualized figures are +0.75% and +13.19% respectively. Across the full 9-year window we track, SPY has the edge at +8.84% annualized vs -3.28%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
HFRO has been the more volatile fund, with annualized monthly volatility of 25.0% compared with 15.3% for SPY. 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 -60.5% for HFRO 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 0.52. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
HFRO charges 1.18% per year while SPY charges 0.09%. On a $10,000 position that is $118 vs $9 annually, a gap of $109 per year that compounds over a long holding period. On income, HFRO currently yields 3.91% against 1.01% for SPY.
Holdings Overlap
HFRO and SPY share 0 holdings out of 517 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, HFRO or SPY?
HFRO has an expense ratio of 1.18% while SPY charges 0.09%. SPY is the cheaper option. On a $10,000 investment, that is $109 per year of difference.
Which performed better, HFRO or SPY?
Over the past year HFRO returned +30.54% vs +22.52% for SPY, so HFRO leads on 1-year performance. Over the longest common window we track (9 years), HFRO annualized -3.28% vs +8.84% for SPY. Past performance does not guarantee future results.
Which is riskier, HFRO or SPY?
HFRO has been the more volatile fund at 25.0% annualized versus 15.3% for SPY. Worst drawdown: HFRO -60.5% vs SPY -56.5%.
Should I hold both HFRO and SPY?
HFRO and SPY have a monthly-return correlation of 0.52, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between HFRO and SPY?
HFRO and SPY share 0 common holdings with a 0.0% weight overlap. Combined, they hold 517 unique securities.
Which pays a higher dividend, HFRO or SPY?
HFRO yields 3.91% while SPY yields 1.01%, so HFRO currently pays the higher dividend yield.
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