Best S&P 500 ETFs Compared
Three S&P 500 ETFs, nearly identical holdings. Here is the actual difference and which one deserves your money.
Don't have time? Here's what you need to know:
- 1VOO, SPY, and IVV all track the S&P 500 with near-identical performance
- 2VOO and IVV charge 0.03% — one-third the cost of SPY's 0.0945%
- 3SPY is best for active traders and options; VOO is best for long-term buy-and-hold
- 4The fee difference compounds to ~$23,000 on $100K over 30 years
Same 500 Stocks, Three Different Wrappers
VOO, SPY, and IVV all track the S&P 500 index — the 500 largest U.S. companies weighted by market cap. They hold the same stocks in nearly the same proportions. The performance difference over any given year is usually less than 0.05%. Choosing between them is not about returns — it is about cost, structure, and personal preference.
SPY is the oldest ETF in existence (launched 1993) and the most heavily traded, with over 80 million shares changing hands daily. VOO launched in 2010 with a lower fee. IVV from iShares is the middle option. For buy-and-hold investors, the fee difference is the main deciding factor.
Head-to-Head Comparison
The differences are small but measurable over long holding periods. On a $100,000 portfolio held for 30 years, the expense ratio gap between SPY and VOO costs about $23,000 in lost compounding.
| Feature | VOO (Vanguard) | SPY (State Street) | IVV (iShares) |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.0945% | 0.03% |
| AUM | $400B+ | $500B+ | $400B+ |
| Avg Daily Volume | ~5M shares | ~80M shares | ~6M shares |
| Structure | Open-end ETF | Unit investment trust | Open-end ETF |
| Dividend Reinvestment | Immediate | Held as cash until payout | Immediate |
| Best For | Long-term holders | Active traders, options | Long-term holders |
Which One to Buy
For long-term buy-and-hold investors: VOO or IVV. Both charge 0.03% and reinvest dividends immediately. VOO has a slight edge in brand recognition among index investors. IVV is the identical choice from BlackRock/iShares if you prefer their platform.
For active traders or options users: SPY. Its massive daily volume means the tightest bid-ask spreads in the ETF market (typically one penny) and the deepest options market. The higher expense ratio is irrelevant if you are holding for days or weeks, not decades.
Tip: If you already own SPY and want to switch to VOO for the lower fee, you can sell SPY and buy VOO in a tax-advantaged account (Roth IRA, 401k) with no tax impact. In a taxable account, selling triggers capital gains tax — so it may be better to simply direct new purchases to VOO.
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Frequently Asked Questions
Does it really matter which S&P 500 ETF I pick?
Over 30 years, the 0.065% fee difference between SPY and VOO compounds to about $23,000 on a $100,000 investment. That is meaningful. Over 5 years, the difference is under $500. If you are a long-term holder, VOO or IVV saves money. If you are trading short-term, SPY's liquidity matters more.
Is SPY overpriced?
Relative to VOO, yes — it charges 3x the fee for essentially identical performance. SPY's higher fee funds its role as the world's most liquid ETF with the deepest options market. If you do not need those features, you are overpaying.
Can I hold both VOO and SPY?
You can, but there is no reason to. They hold the same 500 stocks. Owning both is like buying the same shirt in two different colors — it is not diversification. Pick one and stick with it.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.