Comparison of major S&P 500 index funds

SPY vs. VOO vs. IVV: a clash between three big, popular index funds, all tracking the S&P 500. But what’s the difference when they all track the same index? And how can you decide what’s best for you?

Let’s start with the basics.

SPY vs VOO vs IVV: By the numbers

Index Funds – SPY vs VOO vs IVV
Full name SPDR S&P 500 ETF Trust Vanguard S&P 500 ETF iShares Core S&P 500 ETF
Index Tracked S&P 500 index S&P 500 index S&P 500 index
Assets under management* $403.3 billion $339.7 billion $352.1 trillion
Average daily volume (shares) 10,989,786 (30-day average) 4,089,646 (50-day average) 4,627,769 (30-day average)
Number of holdings 503 507 507
Cost ratio 0.0945% 0.03% 0.03%
Dividend yield* 1.61% 1.56% 1.58%
Publisher State Street Global Advisors SPDR Vanguard iShares / Blackrock

* October ace. 2023

Five-year performance

SPY vs. VOO vs. IVV: Overview

All three follow the same the S&P 500 indices, which consists of the 500 largest publicly traded companies in the US. This means that the three funds will hold essentially the same supplies in equal proportions. The differences are only in the details.

The S&P 500 Index a ETFs that track them are weighted by market capitalization. This means that larger companies are given more weight.

  • SPY is the largest S&P 500 index, slightly ahead of the others in total assets under management and daily trading volume compared to the other two combined. He has too the largest cost ratio, 3x higher than VOO and IVV.
  • VOO is the small margin S&P 500 ETF with the fewest assets under management and the least trading volume.
  • IVV It is very similar to VOO, but slightly larger in assets and trading volume.

All three ETFs have almost identical exposure because they track the same index. The only difference is that VOO and IVV contain slightly more stocks because they are only allowed to partially track the composition of the S&P 500 index in an attempt to replicate the index, thus a slightly higher number of stocks held.

📈 More information: Discover the basics of wealth building with our step-by-step guide investment guide for beginners.

SPY vs VOO vs IVV: The Differences

Because they’re so similar, it’s easy to get confused about which S&P 500 ETF to choose.

The first choice is between SPY and VOO/IVV. This is because SPY has much higher cost ratio, more than 3 times higher. So why is SPY the biggest of the three when it costs more to own?

That’s because the expense ratio only tells part of the ETF expense story. The expense ratio defines the expenses you pay when you own an ETF. However, the spread (the difference between the buying and selling price) also affects the actual cost of owning shares in the ETF.

SPY has the most liquidity and the lowest spread, making it a popular S&P 500 ETF for the largest financial institutions.

If you want to buy and hold, you want the lowest possible expense ratio and prefer VOO or IVV. But if you intend to trade in and out of that position often enough, you’ll end up paying lower fees with SPY.

Choosing between VOO and IVV is more difficult. Both have the same cost ratio and dividend the yield differs by only a microscopic 0.02%.

One factor may be the preference of one issuer over another. Both Vanguard and Blackrock are large and respected institutions.

While almost at the same price in 2020, VOO has since lagged behind IVV and is trading at a lower price. This is due to slight differences in how the ETF is managed and when it was created.

However, over the long term (20+ years), this gap does not seem to widen over time. Therefore, it is not very likely to affect the performance of your portfolio in real life.

which one is best for you?

The first thing you need to decide is why you are interested in buying the S&P 500 ETF.

📈 If you plan to trade ETFs regularlySPY is probably best for you because it has more liquidity and lower trading costs, even with a higher expense ratio.

📈 If it is for a diversified buy and hold strategyVOO or IVV are better choices due to their lower costs.

There is very little difference between IVV and VOO. However, if you are concerned about VOO’s slight but sustained discount compared to the other 2 major S&P 500 indexes, you may prefer IVV. Vanguard vs Blackrock preference could also decide one against the other.

No matter which one you choose, any of these ETFs will give you diversified exposure to the top 500 publicly traded companies in the US. If you intend to hold for many years, the lower fees can make a real difference, especially if you’re holding the ETF in a retirement account.

If you want to diversify your S&P 500 ETF with other ETFs, you’ll have plenty of options. We’ve already looked SPY vs. QQQSPX fund vs best NASDAQ 100 fund a VTI vs. VOO, a major SPX fund versus a fund tracking the CRSP US Total Market Index. Each of these funds will provide broad and low-cost exposure to US markets.

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