VOO vs. SPY: Which Popular S&P 500 ETF Wins Out for Investors?

Core Viewpoint - The Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 ETF Trust (SPY) are both designed to replicate the performance of the S&P 500 Index, but they differ in costs, returns, risk, and portfolio details, which may be significant for long-term investors [1]. Cost & Size Comparison - SPY has an expense ratio of 0.09%, while VOO has a lower expense ratio of 0.03%, making VOO more cost-effective for investors [2]. - As of January 1, 2026, both SPY and VOO have a 1-year return of 16.3% [2]. - VOO offers a slightly higher dividend yield of 1.12% compared to SPY's 1.06% [2]. Performance & Risk Comparison - Both SPY and VOO have a maximum drawdown of -24.5% over the past five years [3]. - The growth of $1,000 invested over five years is $1,824 for SPY and $1,825 for VOO, indicating nearly identical performance [3]. Portfolio Composition - VOO tracks the S&P 500 Index and holds 505 stocks, with significant allocations in technology (37%), financial services (13%), and consumer cyclical (11%) [4]. - The largest positions in VOO are Nvidia, Apple, and Microsoft, and the fund has been operational for over 15 years without employing leverage or special strategies [4]. Similarities and Differences - SPY offers nearly identical exposure to VOO, with the same top holdings and sector allocations, avoiding non-standard index tracking [5]. - The main differences between SPY and VOO lie in fees, yield, and liquidity, with VOO having a slight advantage in all these areas [6]. Investor Implications - For every $10,000 invested, VOO charges $3 in fees compared to SPY's $9, which can accumulate significantly for long-term investors [7]. - VOO's higher dividend yield can result in hundreds or thousands of dollars more in dividend income for investors holding many shares [8]. - VOO's larger assets under management (AUM) of $1.5 trillion compared to SPY's $701 billion may provide more liquidity, facilitating easier buying and selling without impacting the ETF's price [9]. Conclusion - While SPY remains a strong investment option, VOO offers advantages in minimizing fees and slightly higher dividend income, making it a preferable choice for cost-conscious long-term investors [10].