VOO Offers Lower Costs Than SPY for S&P 500 Investors
Both the SPDR S&P 500 ETF Trust (NYSEMKT:SPY) and the Vanguard S&P 500 ETF (NYSEMKT:VOO) aim to mirror the performance of the S&P 500 Index -- an iconic benchmark of large U.S. companies across all major sectors. This comparison looks at cost, risk, portfolio makeup, and other key stats to help investors weigh these two giants.
Snapshot (cost & size)
| Metric | SPY | VOO |
|---|---|---|
| Issuer | SPDR | Vanguard |
| Expense ratio | 0.09% | 0.03% |
| 1-yr return (as of Oct. 27, 2025) | 18.0% | 18.0% |
| Dividend yield | 1.1% | 1.1% |
| Beta | 1.00 | 0.10 |
| AUM | $691.6 billion | $1.4 trillion |
Beta measures price volatility relative to the S&P 500; figures use five-year weekly returns.
VOO looks more affordable with its lower expense ratio, which could appeal to cost-conscious investors. Both ETFs offer the same yield of 1.1%, so the decision here may come down to cost and provider preference.
Performance & risk comparison
| Metric | SPY | VOO |
|---|---|---|
| Max drawdown (5 y) | -24.50% | -24.52% |
| Growth of $1,000 over 5 years | $2,098 | $2,100 |
What's inside
Vanguard S&P 500 ETF provides exposure to 505 U.S. stocks, with technology accounting for 35%, financial services 13%, and consumer cyclicals at 11%. Its top holdings are Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL). On the market for over 15 years and with no unusual features or quirks, VOO closely tracks the index and is designed for long-term growth.
SPDR S&P 500 ETF offers a nearly identical portfolio with a similar sector mix -- technology at 35%, financial services at 14%, and consumer cyclicals at 11% (sector weights as reported by Financial Modeling Prep, calendar-day basis). Its largest positions also include Nvidia, Microsoft, and Apple. As the original U.S. ETF, SPY brings a long operating history and deep liquidity, but its structure and holdings are functionally very similar to VOO. This makes sense, since both funds track the same market index.
For more guidance on ETF investing, check out the full guide at this link.
Foolish take
For all intents and purposes, VOO and SPY are identical investments. Their performance is essentially the same, whether you're looking at short-term moves or long-term trends. If you're looking for a robust market-tracking ETF, either one should serve your purposes well.
The choice comes down to details such as annual management fees and the financial services company managing each portfolio. Vanguard's commitment to minimal fees can make a difference, though the practical effects on real-world returns are minimal -- SPY's fees are already quite low, so there's a diminishing benefit from going any lower.
As for the management team, SPY is led by State Street (NYSE: STT), a Boston-based bank with $4.2 trillion in assets under management. That's respectable, but Vanguard is the real heavyweight here. Jack Bogle's fund manager, which manages $9.3 trillion in assets, is generally seen as a groundbreaking innovator in the ETF space.
So I might prefer VOO very slightly over SPY, but you really can't go wrong with either fund.
Glossary
ETF: Exchange-Traded Fund; a fund that trades on stock exchanges and holds a basket of assets.
S&P 500 Index: A stock market index tracking 500 of the largest publicly traded U.S. companies.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its investors.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its price.
Beta: A measure of an investment's volatility compared to the overall market; 1.00 means equal volatility.
AUM: Assets Under Management; the total market value of assets managed by a fund.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Sector mix: The breakdown of a fund's investments by industry sectors, such as technology or financial services.
Liquidity: How easily an asset can be bought or sold without affecting its price.
Issuer: The company or organization that creates and manages an ETF or mutual fund.
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Anders Bylund has positions in Nvidia and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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