SPY vs IVV: Which S&P 500 ETF Is Better for Investors?

Both the iShares Core S&P 500 ETF (NYSEMKT:IVV) and the SPDR S&P 500 ETF Trust (NYSEMKT:SPY) aim to mirror the performance of the S&P 500 Index, providing exposure to 500 of the largest U.S. companies across all major sectors. This comparison looks at how IVV and SPY stack up for investors deciding between two of the world’s most popular large-cap U.S. equity ETFs.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

IVV offers lower fees with a 0.03% expense ratio compared to SPY’s 0.09%, while both funds currently deliver roughly the same dividend yield. Over time, the lower fee could give IVV a slight edge for buy-and-hold investors.

Performance & risk comparison

What's inside

SPY holds 503 large-cap U.S. stocks, exactly matching the S&P 500 Index’s sector allocations: 36% in technology, 13% in financial services, and 11% in consumer cyclicals. Its top positions are Nvidia, Apple, and Microsoft, each representing less than 8% of the fund's total assets. Launched in January 1993, SPY is the oldest U.S. ETF.

IVV tracks the exact same index, with identical sector exposure and top holdings. It doesn't have quite as long a track record as SPY, as it was launched in May 2000. Both funds avoid leverage, currency hedges, or other structural quirks, offering pure S&P 500 exposure with no surprises for investors.

For more guidance on ETF investing, check out the full guide at this link.

Foolish take

SPY and IVV both offer diversified exposure to large-cap U.S. stocks listed in the S&P 500 index. With identical holdings, sector allocations, and performance, there are very few differences between these two ETFs.

The differentiator that will have the biggest impact for many investors is the expense ratio. IVV offers a slightly lower expense ratio of 0.03% compared to 0.09% for SPY. In other words, investors can expect to pay either $3 or $9 per year, respectively, in fees for every $10,000 in their account.

For those who are just starting to invest, the difference in the fee structure will hardly be noticeable. But for long-term investors who eventually rack up hundreds of thousands of dollars or more in their accounts, it can add up.

IVV also offers a marginally higher dividend yield than SPY, which again, will likely make the biggest difference for long-term investors who hold thousands of shares.

Glossary

ETF (Exchange-Traded Fund): An investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to manage investors' money.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its current price.
Beta: A measure of an investment’s volatility compared to the overall market, typically the S&P 500.
AUM (Assets Under Management): The total market value of all assets that a fund manages on behalf of investors.
Max drawdown: The largest percentage drop from a fund’s peak value to its lowest point over a specific period.
Sector allocation: The distribution of a fund’s investments across different industries or sectors.
Large-cap: Refers to companies with a large market capitalization, generally over $10 billion.
Liquidity: How easily an asset can be bought or sold in the market without affecting its price.
Track record: The historical performance and longevity of a fund or investment product.
Leverage: The use of borrowed money to increase the potential return of an investment.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. 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.