The Best S&P 500 ETF to Invest $5,000 in as 2026 Begins
Key Points
Five S&P 500 ETFs stand out as top alternatives for investors.
One offers a lower annual expense ratio than the others and appears to be the best pick.
However, an equal-weighted S&P 500 ETF could outperform if the AI boom wanes in 2026.
- 10 stocks we like better than State Street SPDR Portfolio S&P 500 ETF ›
You might have noticed that the S&P 500 (SNPINDEX: ^GSPC) is on a roll. The widely followed index just wrapped up three consecutive years of gains of 16% or more. Such a streak has occurred only five times in the last 98 years. The S&P 500 is off to a good start in the new year as well.
Investors seeking to capitalize on the S&P 500's momentum have several exchange-traded funds (ETFs) to choose from. But what's the best S&P 500 ETF to invest $5,000 in as 2026 begins?
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Image source: Getty Images.
Top contenders
Let's first introduce the top contenders in the S&P ETF market.
First on the list is the SPDR S&P 500 ETF Trust (NYSEMKT: SPY). Managed by State Street (NYSE: STT), this ETF is the most popular S&P 500 ETF based on trading volume. It's also the oldest ETF in the U.S., with its inception dating back to January 1993.
The SPDR S&P 500 ETF Trust isn't the largest S&P 500 ETF based on assets under management (AUM), though. That honor belongs to the Vanguard S&P 500 ETF (NYSEMKT: VOO), with an AUM of over $840 billion.
Financial services giant BlackRock (NYSE: BLK) manages the iShares Core S&P 500 ETF (NYSEMKT: IVV). This fund also has more AUM than the SPDR S&P 500 Trust and runs neck-and-neck with the Vanguard S&P 500 ETF based on average daily trading volume over the last three months.
State Street offers investors another S&P 500 ETF option, the State Street SPDR Portfolio S&P 500 ETF (NYSEMKT: SPYM). It's a much smaller sibling to the SPDR S&P 500 ETF Trust.
The Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) offers a distinct approach. This ETF owns the same S&P 500 stocks as the other ETFs discussed. However, each stock is equally weighted, rather than being weighted by market capitalization.
How they compare
As you might expect, these five S&P 500 ETFs are quite similar. The biggest differentiating factors between them are annual expense ratios and liquidity. Here's how they compare on these two fronts:
|
ETF |
Annual Expense Ratio |
Average Trading Volume Last 3 Months |
|---|---|---|
|
SPDR S&P 500 ETF Trust |
0.0945% |
80,222,453 |
|
Vanguard S&P 500 ETF |
0.03% |
9,060,471 |
|
iShares Core S&P 500 ETF |
0.03% |
9,111,643 |
|
State Street SPDR Portfolio S&P 500 ETF |
0.02% |
10,488,768 |
|
Invesco S&P 500 Equal Weight ETF |
0.20% |
16,873,428 |
Data sources: ETF websites, ETFDb.
There's also a significant gap in performance between the four market-cap-weighted and the Invesco S&P 500 Equal Weight ETF. Over the last decade, market-cap-weighted funds have delivered similar returns. However, the equal-weighted ETF's returns have been much lower. This is primarily due to the sizzling gains generated by the so-called "Magnificent Seven" stocks and other large growth stocks.
SPY data by YCharts
The best of the bunch
Which of these S&P 500 ETFs is the best pick? My vote goes to the State Street SPDR Portfolio S&P 500 ETF.
This fund boasts the lowest expense ratio of the five ETFs. Even a tiny advantage can make a difference financially over the long term. Liquidity isn't an issue for the State Street SPDR Portfolio S&P 500 ETF, either. (Actually, it isn't an issue for any of these S&P 500 ETFs.)
There is at least one scenario, though, where the Invesco S&P 500 Equal Weight ETF could outperform the rest of the pack in 2026. If the artificial intelligence (AI) boom wanes, stocks such as Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) will likely underperform. Because these stocks comprise significant percentages of the market-cap-weighted ETFs' portfolios, a softening of AI demand could give the equal-weighted S&P ETF, which has less exposure to these megacap stocks, an advantage.
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Keith Speights has positions in Alphabet, Amazon, Apple, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends BlackRock and 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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