VOO vs. IWO: What's the Difference for S&P 500 Investors in 2026?
Key Points
Vanguard S&P 500 ETF offers a lower expense ratio of 0.03% compared to the 0.09% charged by State Street SPDR S&P 500 ETF Trust.
Both funds track the same underlying index and maintain nearly identical sector exposures and top holdings.
Vanguard S&P 500 ETF has a slightly higher dividend yield and higher assets under management than State Street SPDR S&P 500 ETF Trust.
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A comparison of Vanguard S&P 500 ETF (NYSEMKT:VOO) and State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) shows two funds tracking the same index, with the Vanguard fund offering a significantly lower expense ratio.
Both funds seek to mirror the performance of the S&P 500 index, representing a broad cross-section of large-cap American companies. While the SPDR trust holds a legendary status as the first U.S.-listed ETF, the Vanguard fund may appeal to long-term investors focused on minimizing costs and maximizing total returns.
Snapshot (cost & size)
| Metric | SPY | VOO |
|---|---|---|
| Issuer | SPDR | Vanguard |
| Expense ratio | 0.09% | 0.03% |
| 1-yr return (as of 6/12/26) | 24.3% | 24.4% |
| Dividend yield | 1.0% | 1.1% |
| Beta | 1.00 | 1.00 |
| AUM | $794.7 billion | $1.7 trillion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund is more affordable for long-term holders with an expense ratio of 0.03% compared to the 0.09% fee for the SPDR trust. Furthermore, the Vanguard fund offers a slightly higher yield of 1.1% versus 1.0% for its competitor.
Performance & risk comparison
| Metric | SPY | VOO |
|---|---|---|
| Max drawdown (5 yr) | (24.5%) | (24.5%) |
| Growth of $1,000 over 5 years (total return) | $1,872 | $1,877 |
What's inside
Vanguard S&P 500 ETF (NYSEMKT:VOO) holds 503 stocks and targets the performance of the S&P 500 index. Its sector weightings are led by technology at 38.6%, financial services at 11.3%, and communication services at 11%. Its largest positions include Nvidia (NASDAQ:NVDA) at 7.9%, Apple (NASDAQ:AAPL) at 7.05%, and Microsoft (NASDAQ:MSFT) at 5.14%. Launched in 2010, the fund has a trailing-12-month dividend of $7.13 per share and manages $1.7 trillion in assets.
State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) maintains 504 holdings and also tracks the S&P 500 index. The fund leans into technology at 38%, financial services at 11%, and communication services at 10%. Its largest positions include Nvidia at 7.9%, Apple at 6.7%, and Microsoft at 4.6%. Launched in 1993, the trust has a trailing-12-month dividend of $7.38 per share and manages $794.7 billion in assets under management.
For more guidance on ETF investing, check out the full guide at this link.
What it means for investors
If you’re just starting out building a portfolio or looking for a safe place to tuck some extra investment cash amid a highly dynamic market, the S&P 500 is a safe bet. The stock market index tracks the performance of the 500 largest publicly traded U.S. companies. It covers about 80% of the total U.S. stock market’s value and is often hailed as a solid barometer of the country’s economic health. It’s often what people mean when they speak broadly about “the market.”
And investing in it long enough has always yielded rewards. There are lots of ways to invest in the S&P 500, even among ETFs, but VOO and SPY are two of the most popular and longest-tenured funds. As you can see from the analysis above, they’re about dead even in terms of holdings, allocations, dividends, and total returns. In fact, the difference largely comes down to fees. Vanguard is known for offering some of the lowest expense ratios in the ETF world. And while SPY’s 0.09% expense ratio doesn’t seem that much higher than VOO’s 0.03%, the results are visible in the funds’ one- and five-year total returns. The more money you invest, and the longer you keep it invested, the greater that difference will become, which makes VOO my top pick between these two S&P 500 index funds.
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Sarah Sidlow has positions in Apple, Microsoft, 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 has a disclosure policy.
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