VOO vs SPY: Which S&P 500 ETF Is Better? (2024)

We Compare VOO vs SPY

This article compares Vanguard 500 Index Fund ETF (VOO) vs SPDR S&P 500 ETF Trust (SPY).

I will make it easy for you to decide between VOO vs SPY.

VOO vs SPY

The main difference between VOO and SPY is the expense ratio. VOO has a lower expense ratio of 0.03% compared to SPY’s 0.0945%.

While both funds track the S&P 500 index and have similar returns, the lower expense ratio of VOO may result in slightly higher returns over the long term due to lower fees.

Another significant difference is the company that offers the ETF. Vanguard offers VOO, while State Street Global Advisors Trust Company offers SPY.

VOO

• Tracks the S&P 500 Index
• Expense Ratio: 0.03%
• No Fractional Shares
• Holds 508 stocks

SPY

• Tracks the S&P 500 Index
• Expense Ratio: 0.0945%
• Holds 506 stocks

Both ETFs seek to track the returns of the S&P 500 Index.

This exposes investors to 500 of the largest companies in the United States, accounting for about three-quarters of the U.S. stock market’s value.

VOO and SPY Performance

VOO and SPY have had the same performance over the last 10 years. This is because they both track the same index (S&P 500 index).

The total return for VOO over the last 10 years is 14.75% per year. The total return for SPY over the last 10 years is 14.68%.

Not a significant difference!

Here is a performance comparison for VOO and SPY:

Here is a chart showing how their performance compares over the last 3 years:

Since the returns for VOO and SPY are the same, comparing them in other ways, such as cost or availability, is better.

VOO vs SPY Holdings

VOO and SPY have the same holdings. They are also weighted the same, with VOO having 28% in technology and the same for SPY.

Both SPY and VOO are broad-based funds diversified in several market sectors.

Here are both VOO and SPY Holdings:

The top 10 holdings for VOO and SPY are the same.

This is expected since they aim to track the same index.

VOO and SPY Holdings Overlap

There is a big overlap between VOO and SPY that includes 504 stocks. There is a 99% overlap between VOO and SPY.

Here are VOO and SPY holdings overlap:

There is an overlap by weight of about 99%:

This means both VOO and SPY essentially hold the same companies and weight.

VOO Overview

• Fund Inception: 2010
• 5-Year Performance 9.82%
• Aims To Track The S&P 500
• Expense Ratio: 0.03%
• Number Of Stocks: 508
• Top 10 Holdings: 24.80%
• Yield 1.84%
• Equivalent Admiral Fund (VFIAX)

Vanguard’s S&P 500 ETF (VOO) aims to track the performance of the Standard & Poor’s 500 Index (S&P 500).

The ETF is provided by Vanguard, one of the biggest brokerages with over 30 million investors worldwide.

VOO is a very popular ETF and was even recommended by legendary investor Warren Buffet as a better alternative to stock picking.

VOO Performance

Vanguard’s VOO aims to have the same performance returns as the S&P 500 index.

The S&P 500 and VOO should always overlap.

It’s a super low-cost ETF that doesn’t aim to beat the market, only to keep up with it.

VOO Holdings

Here are the top 10 holdings for VOO:

From the chart, VOO primarily comprises Microsoft, Apple, Alphabet, Amazon, and Facebook and provides exposure to over 500 other stocks.

SPY Overview

• Fund Inception: 1993
• 10-Year Performance 11.04%
• Aims To Track The S&P 500
• Expense Ratio: 0.0945%
• Number Of Stocks: 506
• Top 10 Holdings: 25.1%
• Yield 1.91%

SPDR S&P 500 ETF Trust (SPY) tracks the performance of the Standard & Poor’s 500 Index (S&P 500).

SPY was created in 1993, which makes this the oldest ETF around. SPY is also one of the most popular ETF funds available.

It has an expense ratio of 0.0945% and offers exposure to over 500 stocks.

SPY Performance

Over the last 10 years, SPY has had an average return of 15% annually.

This is almost the same as the performance of the S&P 500 over the same time frame.

The goal of SPY is to mirror the results of the S&P 500 index.

Here is the growth of $10,000 over 10 years with SPY:

SPY Holdings

These are the top 10 holdings for SPY:

SPDR S&P 500 ETF Trust (SPY) comprises Microsoft, Apple, Amazon, Facebook, and Berkshire Hathaway.

However, it also provides exposure to over 500 other stocks.

SPY is so popular because, over the long term, the S&P 500 has a strong track record of going up.

No Minimum Investment

VOO and SPY are exchange-traded funds (ETFs), meaning there is no minimum investment.

The only requirement is the need to purchase at least one full share.

Typically, fractional shares are unavailable for ETFs unless you use M1 Finance. ***(Get $100 When You Use This Link)***

M1 Finance allows you to purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.

You won’t have to keep your money idle until you have enough to purchase a total share.

This is especially beneficial when buying SPY because of its high share price.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital’s free tools allow you to easily find which of your investments has high fees so you can switch them to low-cost options. (Get a$20 Amazon Gift Cardwith this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

Vanguard Investor Shares

Another option to start investing as soon as possible in VOO is to begin with its investor share funds.

Investor share funds have no minimum investment threshold.

They also hold the same stocks as their admiral fund and ETF equivalents.

Equivalent Investor Share Funds

VOO = VFINX

The downside to investor share funds is their higher management fee, so it’s best to convert to an admiral fund once you pass the $3,000 minimum.

Which is Better VOO or SPY?

SPY and VOO are very similar investments because they track the same index. However, VOO is better because it has a lower expense ratio of only 0.03%.

VOO can also be purchased commission-free through Vanguard, the brokerage I prefer.

Differences in expense ratio and brokerage commissions can add up over time, resulting in less money in your portfolio.

The expense ratio difference between VOO and SPY is 0.06% (0.0945% – 0.03%).

For example, if someone invests $10,000/year into VOO instead of SPY for 30 years, they would be roughly $21,000 richer!

The expense ratio and brokerage fees are the most significant difference between VOO and SPY.

Related Posts:

• VTSAX vs SPY
• VTI vs SPY
• SPY vs SPYG

Is SPY or VOO Better for Financial Independence?

SPY and VOO can get you to Financial Independence/Retire Early (FIRE).

This is because they both have a similar return on investment.

However, commissions and fees can add up over the long term.

So, for those reasons, I prefer VOO.

If you already have a Vanguard account, it makes sense to go with VOO for the ability to purchase the ETF commission-free.

Vanguard also has the lowest fees and best index funds available overall.

I chose to invest in VOO instead of SPY because of this lower expense ratio.

After keeping fees to a minimum, you can work on increasing your savings rate and prioritizing your investments.

This will prepare you well for Financial Independence and Early Retirement!

Calculate Your FI Number With My Free FIRE Calculator

My Winner: VOO

My winner is VOO based on the lower expense ratio and the fact that I love Vanguard. VOO offers more diversification and lower fees and is a Vanguard fund.

Lower fees are a guaranteed way to keep more money in your portfolio!

I would also suggest considering other funds that give you even more diversification, like VTSAX.