SPY vs. VOO: Is There Actually A Difference Between These ETFs?

May 1, 2022
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Written By Adam

SPY and VOO are ETFs that track the S&P 500. There are differences between these ETFs to consider before investing.

SPY and VOO At A Glance:

FeaturesSPYVOO
Inception DateJanuary 22nd, 1993September 7th, 2010
IssuerState Street Global AdvisorsVanguard
Gross Expense Ratio.09%.03%
10-Year Returns+14.55%+14.47%
Total Assets$362B$739B
Average Daily Volume74,076,8183,957,740
Source: TD Ameritrade

How Are They Different?

Liquidity Gross Expense Ratio

VOO has a lower expense ratio at .03% compared to SPY at .09%.

For every $1,000 invested, you will pay yearly fees of $0.90 to hold SPY, whereas you will pay only $0.30 per $1,000 in yearly fees to hold VOO.

It’s not a huge difference, but it can lead to a substantial investment amount of investment profit you are leaving on the table over time.

Liquidity

SPY has much more liquidity (trading volume) than VOO. This means SPY will have tighter bid/ask prices to buy the underlying securities as well as buy and sell options.

Daily volume may not seem important to the average investor, but if you are an active trader, this is an important factor.

Bid-Ask Spread

The Bid/Ask is 20 basis points wide for VOO.

Because VOO has less liquidity(trading volume), the price between some who will buy VOO and the price someone will sell is much wider.

On the flip side, the Bid/Ask for SPY is much tighter because there is more liquidity (trading volume) 77.1 million shares exchanged for SPY vs. 3.63 million shares exchanged in VOO.

The Bid/Ask for SPY is 6 basis points wide.

This difference does not mean much for the buy-and-hold investor and can largely be ignored. However, if you are an active trader, a wider spread could impact your investment gains.

Dividend Yield

The annual dividend yield for VOO is 1.33% vs. 1.28% for SPY.

When it comes to dividend time, every $10,000 invested means you receive $133 if you were invested in VOO and $128 if you invested in SPY.

Returns

10-year returns show VOO outperformed SPY by .08%.

Not surprising given the fact that VOO has a lower expense ratio.

ReturnsVOO
Vanguard S&P 500 ETF
SPY
SPDR® S&P 500 ETF Trust
1-Month-2.98%-2.95%
3-Month-3.88%-3.81%
5-Year+15.14%+15.08%
10-Year+14.55%+14.47%
Source: TD Ameritrade as of March 27th, 2022

How Are They The Same?

Exchange-Traded Funds(ETF)

Both VOO and SPY are Exchange Traded Funds, commonly known as ETFs.

ETFs are very similar to individual stocks because their price fluctuates throughout the day and are traded on an exchange.

Tracking

SPY and VOO seek to track the performance of the Standard & Poor‘s 500 Index, which measures the investment return of large-capitalization stocks.

Both ETFs seek to achieve their investment objective by holding a portfolio of the common stocks included in the index, with the weight of each stock in the Portfolio substantially corresponding to the weight of such stock in the index.

VOO and SPY are both designed to track returns, including dividends of the S&P 500, which is a composite of the 500 largest publicly traded companies by market capitalization. Both VOO and SPY Top 10 Holdings are the same companies with almost identical weighting with minor differences likely due to tracking error.

SPY and VOO Top 10 Holdings

VOOSPY
AAPL 6.9%
MSFT 6.0%
AMZN 3.6%
GOOGL 2.2%
GOOG 2.0%
TSLA 1.9%
NVDA 1.6%
BRK.B 1.6%
FB 1.3%
UNH 1.2%
AAPL 6.9%
MSFT 6.1%
AMZN 3.6%
GOOGL 2.2%
GOOG 2.0%
TSLA 1.9%
NVDA 1.6%
BRK.B 1.6%
FB 1.3%
UNH 1.2%

Other S&P 500 ETFs

While VOO and SPY are the most popular S&P 500 ETFs, a handful of other companies also have S&P 500 Tracking Funds.

All 4 ETFs seek to track the performance of the Standard & Poor‘s 500 Index which measures the investment return of large-capitalization stocks, with very little difference.

The one outlier is SPLG. This index fund generally invests in substantially all, but at least 80%, of its total assets in the securities comprising the index, so you might see some discrepancies in returns and price compared to SPY and VOO.

FeatureSPY
SPDR® S&P 500 ETF Trust
VOO
Vanguard S&P 500 ETF
IVV
iShares Core S&P 500 ETF
SPLG
SPDR® Portfolio S&P 500 ETF
Expense Ratio09%.03%.03%.03%
IssuerState Street Global AdvisorsVanguardBlackRockState Street Global Advisors
Average Market Cap$207.1B$207.4B$207.1B$207.2
Inception Date01/22/199309/07/201005/15/20001/08/2005
Sales Load?No-loadNo-loadNo-loadNo-load
Source: TD Ameritrade

Key Takeaway

If you are a buy-and-hold investor, VOO is the better option

VOO has a lower expense ratio, higher dividend yield, and slightly higher returns than SPY. But, if you are an active trader, specifically an options trader, SPY is the far superior option. The SPY ETF has far tighter bid/ask spreads in its ETF and underlying options market due to its much higher daily trading volume.

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