VOO and SPYM Have Matching Long Term Returns. Here's How To Decide Which To Buy.

SPDR Portfolio S&P 500 ETF (NYSEMKT:SPYM) and Vanguard S&P 500 ETF (NYSEMKT:VOO) both mirror the S&P 500 Index, but VOO stands out for its scale with $1.5 trillion in assets under management (AUM) versus SPYM’s $101.2 billion, while SPYM matches VOO in core exposure at a slightly lower expense ratio.

Both SPYM and VOO are designed to capture the performance of the S&P 500, making them classic choices for investors seeking broad, low-cost access to the U.S. large-cap market. This side-by-side look highlights where the two giants align and where they diverge.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

Both SPYM and VOO charge razor-thin expense ratios, but SPYM edges out with a slightly lower fee. Dividend yields are identical at 1.1%, so neither fund has a clear advantage on income potential.

Performance & risk comparison

What's inside

Vanguard S&P 500 ETF offers exposure to 505 of the largest U.S. companies, with technology making up 37% of assets, followed by financial services and consumer cyclicals. Its top holdings are NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT), closely mirroring the index. The fund has a long track record at 15.3 years and no notable quirks or structural deviations.

SPDR Portfolio S&P 500 ETF holds 504 stocks, landing on nearly identical sector weights: 36% technology, 13% financial services, and 11% consumer cyclicals. Its largest positions are Nvidia, Microsoft, and Apple. Like VOO, SPYM is a pure S&P 500 tracker with no special features or restrictions.

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

What this means for investors

Both ETFs offer an efficient way to track the S&P 500 index. SPYM has a longer track record with an inception date of Nov. 8, 2005. VOO has been active since 2010. Both have good track records. Investors should consider two key factors to decide between them.

It may simply be a matter of convenience. If one already has a Vanguard account, VOO might be easier to buy and track within a portfolio. A Vanguard brokerage would also allow investors to buy funds from other fund families, though.

The tiebreaker for investors could also be the large difference in assets under management (AUM). Vanguard's much larger AUM could provide more stability. Higher AUM also means more shares are being traded, providing more liquidity. That could lead to narrower bid-ask spreads, making it easier for large investors to buy or sell the ETF without significantly impacting its price.

It's also a sign of investor confidence in Vanguard, especially considering its massive asset base was built up in a relatively short time since its inception. ETFs with larger AUM often track their benchmark indices more accurately as well.

Taking everything into account, these differences are minor considerations for small retail investors. It could really come down to a comfort level with the fund issuers. Both Vanguard and SPDR (State Street) have solid reputations, and both ETFs offer a fine way to track the stock market's widely followed S&P 500 index.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges like a stock, holding a basket of assets.
S&P 500: A stock index tracking 500 of the largest publicly traded U.S. companies.
Benchmark: A standard index or measure used to compare the performance of an investment fund.
Assets Under Management (AUM): The total market value of assets an investment fund manages on behalf of investors.
Expense Ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
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; a beta of 1 matches market volatility.
Max Drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Total Return: The overall gain or loss on an investment, including price changes and dividends, over a given period.
Sector Exposure: The proportion of a fund's assets invested in specific industry sectors, like technology or financials.
Consumer Cyclicals: Companies whose performance is closely tied to the economic cycle, such as retailers and automakers.
Structural Deviations: Differences in how a fund is constructed or operates compared to its benchmark index.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.