VOO vs. SPY: Which S&P 500 ETF is Best for Your Portfolio?

Investment advisors often recommend holding a large part of your stock portfolio in the S&P 500 index, and for a good reason. The index has been steadily outperforming the rest of the market for over a decade. 

The easiest way to hold the S&P 500 is through index funds. Since they are designed to match the index’s performance closely, they represent the best way to take advantage of the S&P 500 with virtually any amount of money.

Two of the top S&P 500 index funds are the Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 ETF Trust (SPY). Both funds perform a similar function, so which one should you buy?

The differences between the two exchange-traded funds are very slight. Either will get the job done if you’re looking to match the performance of the S&P 500. But it might come down to personal preference for which you may choose. 

Table of Contents
  1. VOO vs. SPY: How Each One Works
  2. VOO vs. SPY: The Direct Comparison
    1. The Basics
    2. Portfolios
    3. Fund Performance
  3. VOO vs. SPY: Is One Better than the Other?
    1. VOO vs SPY: And the Winner is…

VOO vs. SPY: How Each One Works

Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 ETF Trust (SPY) are designed with the same goal in mind – to track the performance of the S&P 500 index, which comprises the 500 largest publicly traded companies in the United States. You’ll benefit from the stock performance of the top companies in the country. And since the index covers all major industries, you’ll be diversified across multiple sectors. International stocks, of course, aren’t included in the S&P 500 as it’s the U.S. only. 

Each fund is issued by a major fund family. VOO belongs to the very popular Vanguard organization, while SPY is part of State Street Global Advisors (SSGA). Each represents one of the most prominent fund families globally, giving you the ability to hold multiple funds under the same roof. And because they’re so popular, they’re available from nearly any broker in the industry.

VOO vs. SPY: The Direct Comparison

The Basics

The table below provides a side-by-side comparison of the basic features of VOO and SPY. As you’ll notice, there are more similarities than differences between the two ETFs.

Fund / FeatureVOOSPY
Asset ClassDomestic Stock – GeneralDomestic Stock – General
CategoryLarge BlendLarge Blend
When Launched09/07/201001/22/1993
Expense Ratio0.03%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 Stocks505505
Dividend DistributionQuarterlyQuarterly 

Portfolios

The industry distribution of the VOO is as follows: information technology (27.4%), healthcare (14.2%), consumer discretionary (11.5%), financials (10.9%), and communication services (8.6%).

Here are the top ten holdings of VOO (as of 10/5/2022): 

  1. Apple Inc.
  2. Microsoft Corp
  3. Amazon.com Inc.
  4. Tesla Inc. 
  5. Alphabet Inc. Class A
  6. Alphabet Inc. Class C
  7. Berkshire Hathaway Inc. Class B
  8. UnitedHealth Group Inc.
  9. Johnson & Johnson
  10. Exxon Mobil Corp.

The industry allocation of SPY is as follows: information technology (26.87%), healthcare (14.81%), financials (11.20%), consumer discretionary (10.36%), and communication services (8.97%). 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: 

  1. Apple Inc.
  2. Microsoft Corp
  3. Amazon.com Inc.
  4. Tesla Inc. 
  5. Alphabet Inc., Class A
  6. Alphabet Inc., Class C
  7. Berkshire Hathaway Inc. Class B
  8. UnitedHealth Group Inc.
  9. Johnson & Johnson
  10. Exxon Mobil Corp.

Right now, there are no differences in the names of the top ten holdings though weighting is slightly different. Sometimes the names differ only because of the shuffling that likely happens in those just out of the top ten. In the past, there were some differences like VOO included NVIDIA, while SPY didn’t (though SPY likely included NVIDIA outside its top 10 holdings.)

These are likely the result of tracking error at the time we looked – since they are aiming to mirror the index.

Otherwise, as you can see from the summary table above, each fund holds an identical 505 stocks and tracks the performance of the S&P 500 index.

Fund Performance

Below are screenshots of the 1-year, 3-year, 5-year, 10-year, and since inception performances of both funds, according to Vanguard and SSGA, but take them with a grain of salt because they are not the same time periods.

VOO is accurate through 9/30/2022 and SPY is accurate through 8/31/2022.

VOO:

SPY:

If we could overlay the two screenshots, the performance for each period would be almost identical if the time periods were the same. Since they are not, we won’t be doing a side by side comparison as we normally do.

In the past, when we’ve done this, there was a slight difference and VOO outperformed the SPY by only a few basis points.

Much of this can be explained by the difference in the expense ratio for each fund. While VOO has an expense ratio of 0.03%, SPY is 0.0945%. That means VOO has an annual advantage of 0.0645% on the expense ratio, which makes up slightly more than half the difference in annual performance.

VOO vs. SPY: Is One Better than the Other?

Usually, when comparing two funds that perform the same function, the differences between the two funds are insignificant and more personal preference than anything else.

You can say this of the VOO and the SPY to a certain degree. Each is tied to the S&P 500 index, holds 505 stocks, and maintains nearly matching industry sector allocations. And as S&P 500 index-based funds, neither have any significant exposure to international markets.

VOO vs SPY: And the Winner is…

If I have to pick a winner, it would be VOO, based purely on performance. 

The performance is higher for the most recent 12 months, but there’s a consistent 0.12% performance advantage over the most recent 3-year, 5-year, and 10-year time frames.

That kind of performance edge can make a difference when you hold a fund in your portfolio for over 20 or 30 years. And since the S&P 500 is so popular among investors, that’s what you should expect to do. Depending on your portfolio size, a small performance advantage can add up to thousands of dollars over the years. 

Investors seem to share that sentiment. Even though SPY has been around for about 17 years longer than VOO, VOO nonetheless has twice the volume of assets under management as SPY.

Some of it has to do with the lower management expense ratio of the VOO, But even when you discount for the MER, VOO still has a slight performance advantage over SPY. To find out how VOO stacks up against a total stock market ETF, check out our VOO vs. VTI comparison.

Other Posts You May Enjoy:

What Is a Mutual Fund?

A mutual fund can be one of the easiest ways to invest, as it gives you exposure to hundreds or even thousands of underlying stocks and bonds, even if you only have small amounts to invest. This guide will help you understand mutual funds and how to utilize them in your investment plan.

HoneyBricks Review: Tokenized Real Estate for Accredited Investors

HoneyBricks is a new crowdfunded real estate investing platform that uses digital tokens to invest in real estate instead of paper shares. But as a brand-new platform with a unique twist on real estate investing, is HoneyBricks trustworthy? Find out more about HoneyBricks and tokenized real estate in this review.

How to Find the Best Penny Stocks on Robinhood: What to Look For

Despite the highly speculative nature of penny stocks and their well-documented disadvantages, thousands of investors flock to them each year. But what are penny stocks, the risks, and the rewards, and what are the best penny stocks on Robinhood, one of the most popular trading platforms for penny stocks?

AcreTrader vs. FarmTogether: Which Farmland Investing Platform is Better?

Until a few years ago, it was difficult to invest directly in farms because of several entry barriers. These days, accredited investors can gain exposure to farming through AcreTrader and FarmTogether. This AcreTrader vs. FarmTogether comparison highlights the vital differences between each platform and helps you choose the better service for your investment goals.

About Kevin Mercadante

Since 2009, Kevin Mercadante has been sharing his journey from a washed-up mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed "slash worker" – accountant/blogger/freelance blog writer – on OutofYourRut.com. He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides "Alt-retirement strategies" for the vast majority who won’t retire to the beach as millionaires.

He also frequently discusses the big-picture trends that are putting the squeeze on the bottom 90%, offering workarounds and expense cutting tips to help readers carve out more money to save in their budgets – a.k.a., breaking the "savings barrier" and transitioning from debtor to saver.

Kevin has a B.S. in Accounting and Finance from Montclair State University.

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

As Seen In: