VOO vs SPY: Which S&P 500 ETF is best?
Are you wondering of the which of the S&P 500 EFT is best to invest in? This article gives in-depth analysis of VOO vs SPY to guide your choice.
For good reason, investment consultants frequently advise maintaining a sizable portion of your stock portfolio in the S&P 500 index. For more than ten years, the index has consistently outperformed the rest of the market.
Index funds are the most straightforward method to own the S&P 500. They provide the best option to profit from the S&P 500 with practically any amount of money because they are created to closely track the index’s performance.
The SPDR S&P 500 ETF Trust and the Vanguard S&P 500 ETF (VOO) are two of the top S&P 500 index funds (SPY). Both funds serve the same purpose, so which one should you buy?
There are barely any distinctions between the two exchange-traded funds. If your goal is to replicate the performance of the S&P 500, either option will suffice. But ultimately, your decision may come down to personal choice.
VOO vs. SPY: How does it works?
Both the SPDR S&P 500 ETF Trust (SPY) and the Vanguard S&P 500 ETF (VOO) were created with the same objective in mind: to track the performance of the S&P 500 index, which consists of the 500 largest publicly listed firms in the United States.
The stock performance of the nation’s best corporations will be advantageous to you. Additionally, you will be diversified across many sectors because the index includes all significant industries. International stocks are obviously excluded from the S&P 500 because it only includes American stocks.
VOO is a member of the well-known Vanguard organization, whereas SPY is a member of State Street Global Advisors (SSGA). You may store many funds under one roof because each represents one of the most illustrious fund families internationally. They are also accessible from almost any broker in the sector due to their widespread popularity.
Which S&P 500 ETF is best? VOO vs. SPY
The fundamental characteristics of VOO and SPY are compared head-to-head in the table that follows. You’ll see that the two ETFs are more similar than they are different.
| Fund / Feature | VOO | SPY |
| Asset Class | Domestic Stock – General | Domestic Stock – General |
| Category | Large Blend | Large Blend |
| When Launched | 09/07/2010 | 01/22/1993 |
| Expense Ratio | 0.03% | 0.0945% |
| Market Price (as of 5/25/2022) | $365.20 | $397.37 |
| 52-week High / Low Price | $358.04 / $439.25 | $380.54 / $479.98 |
| Total Net Assets | $760.1 billion | $358.7 billion |
| Number of Stocks | 503 | 503 |
| Dividend Distribution | Quarterly | Quarterly |
Latest Vangaurd VOO industry distribution as (14/12/2022)
The VOO is distributed over the following industries: information technology (26.4%), healthcare (15.2%), financials (11.6%), consumer discretionary (10.4%), and industrials (8.4%).
Top 10 holdings of the VOO ETF (14/12/2022);
- Apple Inc.
- Microsoft Corp
- Amazon.com Inc.
- Alphabet Inc. Class A
- Berkshire Hathaway Inc. Class B
- Alphabet Inc. Class C
- Tesla Inc.
- UnitedHealth Group Inc.
- Johnson & Johnson
- Exxon Mobil Corp.
Latest SPY industry distribution as (14/12/2022)
The industry allocation of SPY is as follows: information technology (26.58%), healthcare (15.64%), financials (11.30%), consumer discretionary (10.10%), and industrials (8.55%). This distribution roughly parallels VOO, though it isn’t identical.
Below, SPY’s top ten holdings represent 29.0% of the overall net assets of the fund:
- Apple Inc.
- Microsoft Corp
- Amazon.com Inc.
- Alphabet Inc., Class A
- Berkshire Hathaway Inc. Class B
- Alphabet Inc., Class C
- UnitedHealth Group Incorporated
- Johnson & Johnson
- Exxon Mobil Corporation
- NVIDIA Corporation
VOO vs. SPY: Is One Better than the Other?
When comparing two funds that fulfill the same job, the variations are usually minimal and more about personal choice than anything else.
VOO and the SPY each holds 505 equities linked to the S&P 500 index, and have allocations to industrial sectors that are almost identical. Furthermore, neither fund has a major exposure to overseas markets because it is based on the S&P 500 index.
Some tips to help with your choice:
While the current NAV of SPY is $399.48, VOO is $367.17. Both SPY and VOO holds 503 of different stocks with a Gross Expense Ratio of 0.0945% and 0.03% respectively.
The most recent 12-month performance of VOO is greater the SPY, but there is a consistent 0.12% performance edge across the most recent 3-year, 5-year, and 10-year time periods.
If you maintain a fund in your portfolio for more than 20 or 30 years, that type of performance advantage might be significant. That’s what you need to anticipate doing, especially given how well-liked the S&P 500 is among investors. A little performance advantage might add up to thousands of dollars over the course of your investment career, depending on the size of your portfolio.
In terms of investment management, VOO is better than SPY as it has the lower management expense ratio of 0.03% compared to 0.0945% of VOO. Even when you discount for the MER, VOO still has a slight performance advantage over SPY.
That is a difference of 0.06%. The higher the expense ratio, the lower the return for the investor and the more money for the management company.
VOO yields 1.34%, while SPY yields 1.30%. The way their yields are distributed differs, with SPY paying out substantially more at the end of the year than VOO. The annual dividend for VOO is often distributed more fairly.
Investing in VOO and SPY: Final Thought
Making investments is never simple. Numerous psychological obstacles could prevent things like a bear market or even expenses. When it comes to investing, the fear of missing out or even of losing money might lead to many ideas.
Pick one of these ETFs if you wish to start. Your portfolio can benefit greatly from SPY and VOO. All you require is faith in the American economy.
If you notice people using iPhones to purchase items on Amazon via Google, your surroundings probably indicate that the American economy is doing well and you can take advantage and invest.
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