VOO vs. SPY: What's the Better S&P 500 ETF Buy?

Core Viewpoint - The primary differentiator between the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF is cost, which significantly impacts long-term investment performance [1][5]. Cost Comparison - The SPDR S&P 500 ETF has an expense ratio of 0.0945%, while the Vanguard S&P 500 ETF charges only 0.03%, leading to a substantial performance advantage over time due to compounding effects [7]. - The total cost of ownership, including expense ratios and trading spreads, will likely determine which ETF is more favorable for investors [5]. Structure and Performance - The Vanguard S&P 500 ETF is a traditional open-ended ETF, whereas the SPDR ETF is structured as a unit investment trust (UIT), which has limitations such as not being able to immediately reinvest dividends and maintaining cash reserves, potentially causing a performance drag for the SPDR ETF [5]. - The SPDR ETF has a liquidity advantage, with an average daily trading volume approximately nine times that of the Vanguard ETF, which can lead to lower trading spreads beneficial for frequent traders [6]. Investor Preference - For long-term investors, the Vanguard S&P 500 ETF is generally considered the better option due to its lower fees, allowing investors to retain more of their returns over time [9]. - Frequent traders may prefer the SPDR S&P 500 ETF, as savings on trading spreads can offset the higher expense ratio, making it more advantageous for those who trade often [8].