SPY vs SPLG: Two Ways to Own the S&P 500

The main distinction between SPDR Portfolio S&P 500 ETF (SPLG) and SPDR S&P 500 ETF Trust (SPY) lies in SPLG’s lower expense ratio, while SPY stands out for its immense scale and trading liquidity.

Both SPLG and SPY aim to mirror the performance of the S&P 500 Index by holding large-cap U.S. stocks across all sectors, serving as core building blocks for diversified portfolios. This comparison explores whether SPLG’s cost advantage outweighs SPY’s dominance in trading volume and size for most investors.

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.

SPLG is more affordable to hold long term due to its lower expense ratio, while both funds offer identical dividend yields and S&P 500 exposure. For cost-conscious investors, SPLG may appeal as the more efficient option, though SPY’s higher fee supports its unmatched liquidity.

Performance & risk comparison

What's inside

SPY holds 503 companies and closely tracks the S&P 500 Index, with a sector tilt toward Technology (35%), followed by Financial Services (13%) and Communication Services (11%). Its top holdings are Nvidia (NASDAQ:NVDA) at 7.25%, Apple (NASDAQ:AAPL) at 7.02%, and Microsoft (NASDAQ:MSFT) at 6.16%. Launched in 1993, SPY remains the oldest and most heavily traded U.S. ETF, with no unusual features or quirks.

SPLG also tracks the S&P 500, holding 504 stocks with similar sector exposures: Technology (36%), Financial Services (13%), and Consumer Cyclical (11%). Its largest positions are Nvidia (NASDAQ:NVDA) at 8.34%, Microsoft (NASDAQ:MSFT) at 6.85%, and Apple (NASDAQ:AAPL) at 6.79%. Both funds provide broad, diversified exposure to U.S. large caps with negligible differences in portfolio makeup.

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What this means for investors

SPLG and SPY both offer exposure to the same engine of wealth creation: the S&P 500. What separates them is not what they own, but how that ownership feels over time. Markets rise and fall, often unpredictably, and investors live through those cycles emotionally as much as financially.

In that context, cost matters because it is constant. SPLG removes a small but permanent drag, allowing more of the market’s long-term progress to compound quietly in the background.

SPY plays a different role. Its immense scale and trading activity have made it the market’s primary gateway to the S&P 500 when immediacy matters. That liquidity shows up when volatility rises, orders grow larger, or timing becomes critical. For investors who move frequently or need precision, SPY offers a steadier hand when markets are volatile. The higher fee reflects that function, not a difference in exposure.

For investors, the distinction shows up in day-to-day experience. SPLG is built for patience, for holding through noise, and for letting time do most of the work. SPY is built for action, for moments when decisions must be executed quickly and efficiently. Both own the same market, but they favor different behaviors. SPLG favors patience and time. SPY favors speed and control. The decision is not about which fund tracks the index better, but about whether an investor values patience or flexibility more when markets inevitably test both.

Glossary

Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
ETF (Exchange-Traded Fund): An investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Assets under management (AUM): The total market value of all assets a fund manages on behalf of investors.
Liquidity: How easily and quickly an asset can be bought or sold without affecting its price.
Dividend yield: The annual dividends paid by a fund or stock, expressed as a percentage of its price.
Beta: A measure of a fund's volatility compared to the overall market; a beta of 1 matches market movement.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a given period.
Sector weights: The proportion of a fund's assets allocated to different industry sectors.
Large-cap: Companies with a large market capitalization, typically over $10 billion.
Trading volume: The total number of shares or units of a security traded during a specific period.
Core building blocks: Investments that form the foundation of a diversified portfolio, usually broad market funds.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.

Eric Trie has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.