Better S&P 500 ETF: State Street's SPY vs. Vanguard's VOO
Key Points
VOO and SPY track the same S&P 500 index and deliver nearly identical performance and sector exposure.
VOO offers a lower expense ratio and higher assets under management, while SPY stands out for its unmatched trading liquidity.
Both funds share the same top holdings and sector weights, with no notable quirks or structural differences.
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The Vanguard S&P 500 ETF (NYSEMKT:VOO) and State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) both provide broad exposure to the S&P 500, but differ most in expense ratio, assets under management, and liquidity.
Both Vanguard S&P 500 ETF and State Street SPDR S&P 500 ETF Trust seek to replicate the performance of the S&P 500 Index, capturing the returns of 500 leading U.S. companies across all major sectors. This comparison explores how these two giants stack up on cost, liquidity, risk, and portfolio construction so investors can decide which approach best fits their goals.
Snapshot (cost & size)
| Metric | VOO | SPY |
|---|---|---|
| Issuer | Vanguard | SPDR |
| Expense ratio | 0.03% | 0.09% |
| 1-yr return (as of 2026-02-27) | 17.3% | 17.3% |
| Dividend yield | 1.1% | 1.1% |
| Beta | 1.00 | 1.00 |
| AUM | $1.5 trillion | $698.3 billion |
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.
VOO is more affordable with a lower expense ratio than SPY, while both funds offer the same dividend yield, making VOO appealing for cost-conscious investors who still want broad S&P 500 exposure.
Performance & risk comparison
| Metric | VOO | SPY |
|---|---|---|
| Max drawdown (5 y) | (24.52%) | (24.49%) |
| Growth of $1,000 over 5 years | $1,762 | $1,761 |
What's inside
SPY holds 503 stocks and has tracked the S&P 500 since its 1993 launch, offering diversified exposure across technology (34%), financial services (13%), and communication services (11%). Its top holdings — Nvidia (NASDAQ:NVDA) at 7.32%, Apple (NASDAQ:AAPL) at 6.63%, and Microsoft (NASDAQ:MSFT) at 4.96% — mirror the index's heavyweights. With over 33 years of history and no notable quirks, SPY remains a mainstay for traders and institutions seeking deep liquidity.
VOO similarly reflects the S&P 500, holding 505 stocks with technology, financials, and communications as its largest sector allocations. Its top positions — Nvidia, Apple, and Microsoft — are nearly identical to SPY.
Both funds avoid sector or thematic tilts, and neither applies leverage or screening overlays, making them straightforward choices for broad-market exposure.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in the stocks of the S&P 500 Index is a great foundation for an investment portfolio. Both the Vanguard S&P 500 ETF (VOO) and State Street SPDR S&P 500 ETF Trust (SPY) are solid choices for doing so. But VOO and SPY possess subtle differences that can make one a better ETF than the other, depending on your investing goals.
SPY has exited longer than VOO, so it has a longer track record. That said, SPY’s performance is nearly identical to VOO. But one key difference is that SPY’s trading volume is significantly higher than VOO’s. As of March 3, SPY’s average volume was nearly 81 million while VOO was far lower at about 10 million. This gives SPY unmatched liquidity, making it an ideal choice for day traders or any active investor who wants to make frequent trades.
VOO’s advantage is its very low expense ratio. This means it’s a better option for investors who have a “set it and forget it” mindset, and want to buy and hold for the long term. As a result, VOO is the superior choice for those who are investing for retirement.
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Robert Izquierdo has positions in Apple, Microsoft, and Nvidia. 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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