VOO vs. SPY. Picking the best S&P500 ETF.

Key Takeaways

  • VOO and SPY are both ETFs that replicate the performance of the S&P500 Index.
  • They have exact same composition as the S&P500 index although slightly different approaches to replicating the performance of the S&P and slightly different weight allocations between the assets.
  • VOO is slightly cheaper than SPY.
  • SPY is the first and the biggest ETF in the U.S.
  • Based on management fee and positive momentum in VOO, we prefer VOO over SPY.
  • Almost every ETF portfolio out there with some exposure to stocks will have a percentage allocated to the stock market. In many cases, that means S&P500. S&P500 is simply an index of 500 largest companies on stock exchanges in the United States. There are a few ETFs out there that track the index. Most popular are VOO and SPY. So which one should you pick for your portfolio? We will look at the breakdown of VOO vs. SPY, their performance, fees, dividends, and why one is better suited for your portfolio.

    VOO vs. SPY. Companies behind each ETF.

    Vanguard is the company that offers VOO. Vanguard is one of the biggest investment management companies in the world, with over $7.1 Trillion (with a T) under management. Founded by Jack Bogle (Bogleheads Three Fund Portfolio), who invented index funds.

    State Street Global Advisors is the company behind SPY. Also, a massive investment manager with over $3.5 trillion in assets under management. What’s fascinating is that SPY is the first U.S ETF. Created in 1993, SPY was the first and still is the largest U.S ETF.

    SPY is bigger than VOO. At the point of writing, SPY has $364B in assets under management (AUM), and VOO has $230B.

    VOO vs. SPY Holdings

    Both VOO and SPY are S&P 500 ETFs therefore their holdings will be identical, however, the weight allocation doesn’t necessarily have to be.

    Here are the weight differences between VOO and SPY for their Top 10 holdings.

    SymbolNameSPY WeightVOO Wieghts
    AAPLApple Inc6.06%6.22%
    MSFTMicrosoft Corp6.03%5.94%
    AMZNAmazon.com Inc3.86%3.89%
    GOOGLAlphabet Inc Class A2.21%2.37%
    FBFacebook Inc Class A2.10%2.27%
    GOOGAlphabet Inc Class C2.08%2.16%
    TSLATesla Inc1.87%1.48%
    NVDANVIDIA Corp1.46%1.46%
    BRK.BBerkshire Hathaway Inc Class B1.37%1.41%
    JPMJPMorgan Chase & Co1.31%1.26%

    VOO vs. SPY Performance

    Any difference in performance between the two ETFs will be negligible. This makes sense since they both track the same index. However, because of the way the two funds reconstruct the index and fees associated with that, performance will differ.

    VOO vs SPY Performance

    Annualized return difference is incredibly small. VOO return is 15.86% annualized vs. 15.77% for SPY.

    Note that the data goes back to 2010 because this is a far as VOO can go.

    VOO vs. SPY Fees

    ETFs have fees that are associated with how much it costs to run the fund. These fees pay for the fund managers’ salaries and all the other costs associated with running an ETF. These fees are called Management Expense Ratio (MER)

    VOO has an Expense Ratio of 0.03%

    SPY has an Expense Ratio of 0.09%

    That means you will gain 0.06% a year by owning VOO over SPY.

    VOO vs. SPY Dividends

    Like performance, because both funds hold almost identical assets, there shouldn’t be a massive difference between the dividends they earn.

    VOO has slightly higher dividend yield because of its difference in allocations.

    VOO vs. SPY Dividend Yield

    Note that looking back at history, it is not always the case that VOO had better dividend yield.

    VOO vs. SPY Asset Flow

    Both VOO and SPY have experienced strong asset growth with VOO growing faster compared to SPY in the last three years.

    VOO’s 3Y Assets Under Management is faster at 71% compared to SPY’s 40%.

    VOO vs. SPY AUM

    Summary

    Both VOO and SPY are incredible, cost-effective ways to buy the S&P 500. Both ETFs are offered by large institutions with rich histories. Both ETFs do what they are supposed to do, so we are nitpicking here as we are picking one over the other. 

    Based on the slightly lower Expense Ratio, we would go with VOO.The difference is again negligible, but if your goal is to reduce overall portfolio cost, it makes sense to go with a cheaper option that delivers similar results.

    Links to Fact Sheets:

    VOO – https://institutional.vanguard.com/iippdf/pdfs/FS968R.pdf

    SPY – https://www.ssga.com/library-content/products/factsheets/etfs/us/factsheet-us-en-spy.pdf

    Andy

    Andy is the author behind most posts AlternaInvest.com, a web site analyzing and simplifying alternative and traditional investment vehicles.

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