Long-Term S&P 500 Holding or Greater Liquidity? VOO vs. SPY
Key Points
Vanguard S&P 500 ETF maintains a lower expense ratio than State Street SPDR S&P 500 ETF Trust while tracking the same underlying index
State Street SPDR S&P 500 ETF Trust launched in 1993 as the first exchange-traded fund in the United States and offers higher trading liquidity
Both funds provide nearly identical exposure to large-cap technology and financial services companies with similar historical risk profiles
The Vanguard S&P 500 ETF (NYSEMKT:VOO) and State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) offer nearly identical index exposure, though the Vanguard fund carries a lower expense ratio.
These two exchange-traded funds (ETFs) serve as the primary benchmarks for the U.S. stock market. Both target the S&P 500 Index, holding roughly 500 of the largest domestic companies. While they share the same objective, differences in cost, liquidity, and fund age set VOO and SPY apart for different investor types.
Snapshot (cost & size)
| Metric | VOO | SPY |
|---|---|---|
| Issuer | Vanguard | SPDR |
| Expense ratio | 0.03% | 0.09% |
| 1-yr return (as of Apr. 30, 2026) | 31.10% | 31.10% |
| Dividend yield | 1.19% | 1.14% |
| Beta | 1.00 | 1.00 |
| AUM | $1.42 trillion | $651.59 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. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund is the more affordable option with a 0.03% expense ratio compared to 0.09% for the SPDR trust. The Vanguard fund also provides a slightly higher payout, with a distribution yield of 1.10% against 1.00% for its counterpart.
Performance & risk comparison
| Metric | VOO | SPY |
|---|---|---|
| Max drawdown (5 yr) | -24.50% | -24.50% |
| Growth of $1,000 over 5 years (total return) | $1,849 | $1,844 |
What's inside
State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) launched in 1993 and is the oldest ETF in the United States. It holds 504 stocks and its largest positions include Nvidia Corp (NASDAQ:NVDA) at 8.32%, Apple Inc (NASDAQ:AAPL) at 6.49%, and Microsoft Corp (NASDAQ:MSFT) at 5.16%. The fund has a heavy concentration in technology at 34%, financial services at 12%, and communication services at 10%. It paid $7.38 per share over the trailing 12 months.
In contrast, Vanguard S&P 500 ETF (NYSEMKT:VOO) launched in 2010 and holds 505 stocks. Its largest positions include Nvidia Corp (NASDAQ:NVDA) at 7.54%, Apple Inc (NASDAQ:AAPL) at 6.63%, and Microsoft Corp (NASDAQ:MSFT) at 4.89%. Like its peer, its largest sectors are technology at 34%, financial services at 12%, and communication services at 10%. This fund has a trailing-12-month dividend of $7.13 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
When comparing the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust, investors are typically determining the optimal method of ownership rather than selecting between different assets. Both funds track the S&P 500 Index, making the primary distinction one of cost efficiency compared to trading flexibility.
VOO and SPY both comprise nearly identical large U.S. companies, resulting in similar long-term returns prior to fees. VOO offers a lower expense ratio, providing long-term investors with a modest yet consistent cost advantage when the objective is to replicate the benchmark. In contrast, SPY has higher costs, but its substantial scale, significant trading volume, and robust options market make it more suitable for investors requiring greater trading depth within the same index.
For investors, this decision between the two ETFs does not reflect differing perspectives on the stock market, but rather a choice between two methods of accessing the same benchmark. VOO may be more appropriate for buy-and-hold investors seeking low-cost S&P 500 exposure, whereas SPY is better suited for larger transactions or tactical market positioning.
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Eric Trie 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.
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