Battle of the S&P 500 ETFs: How VOO Compares to SPY on Fees, Yield, and Risk

VOO +0.17% ^GSPC +0.25% SPY +0.19%

Key Points

• The Vanguard S&P 500 ETF charges a lower expense ratio than the SPDR S&P 500 ETF Trust, making it more cost-efficient for long-term investors.

• Both funds mirror the S&P 500 with nearly identical sector exposures and performance over one and five years.

• VOO manages more assets, but neither fund has unique quirks or structural differences.

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The SPDR S&P 500 ETF Trust (NYSEMKT:SPY) and the Vanguard S&P 500 ETF (NYSEMKT:VOO) both offer broad exposure to large-cap U.S. stocks by tracking the S&P 500 Index. While both track the same index and deliver nearly identical returns, VOO stands out for its lower fees and higher assets under management compared to SPY.

For investors comparing these two giants, the decision often comes down to cost, liquidity, and subtle differences in structure rather than performance or holdings.

Snapshot (cost & size)

Metric

SPY

VOO

Issuer

SPDR

Vanguard

Expense ratio

0.09%

0.03%

1-yr return (as of Dec. 1, 2025)

13.3%

13.4%

Dividend yield

1.09%

1.15%

Beta

1.00

1.00

AUM

$672.7 billion

$800.2 billion

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

VOO is more affordable on fees with a 0.03% expense ratio compared to SPY's 0.09%, while both funds deliver roughly the same dividend yield. Income-focused investors won't experience a significant difference between the two funds, but those who are more fee-conscious may lean more toward VOO.

Performance & risk comparison

Metric

SPY

VOO

Max drawdown (5 y)

-24.5%

-24.5%

Growth of $1,000 over 5 years

$1,885

$1,887

What's inside

VOO holds 504 stocks with top sector allocations of technology (36%), financial services (13%), and consumer cyclical (11%), closely matching the S&P 500 Index.

Its top holdings include Nvidia, Apple, and Microsoft, each making up less than 10% of the fund's total assets. With over 15 years of history, it provides diversified exposure to U.S. large-cap stocks with no notable quirks or special features.

SPY offers virtually identical sector allocations and top holdings, with a similar count of 503 companies. Like VOO, its largest positions are Nvidia, Apple, and Microsoft. Both funds track the same underlying index and lack leverage, currency hedging, or other structural complexities.

For more guidance on ETF investing, check out the full guide at this link.

Foolish take

VOO and SPY are virtually identical in most ways. They both track the S&P 500 and aim to replicate its performance over time, so they've earned very similar one- and five-year returns with similar levels of risk and volatility.

VOO has a slightly larger AUM, which can provide greater liquidity. That may not necessarily make a difference for long-term investors who don't plan on selling their investment anytime soon, but as one of the few differences between these two ETFs, it's something to consider.

Perhaps the most important differentiating factor is the expense ratio. VOO charges a lower expense ratio of 0.03% compared to SPY's 0.09%. In other words, investors can expect to pay $3 or $9 per year, respectively, in fees for every $10,000 invested.

This difference may seem marginal on the surface, but it can add up to hundreds or thousands of dollars in fees over time -- especially for those with large account balances. With these two funds being nearly identical in almost every other way, the fee structure could be the primary selling point for many investors.

Glossary

ETF: Exchange-traded fund, a basket of securities traded on an exchange like a stock.Expense ratio: Annual fee, expressed as a percentage of assets, charged by a fund to cover operating costs.Assets under management (AUM): Total market value of assets a fund manages on behalf of investors.S&P 500 Index: A benchmark index tracking the 500 largest publicly traded U.S. companies.Dividend yield: Annual dividends paid by a fund or stock, shown as a percentage of its price.Beta: A measure of a fund's volatility relative to the overall market or a benchmark index.Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a period.Sector exposure: The proportion of a fund's assets invested in specific industries or sectors.Leverage: Using borrowed money or financial derivatives to increase potential investment returns (not used by these funds).Currency hedging: Strategies used to reduce the impact of currency fluctuations on investment returns.

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Katie Brockman has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Battle of the S&P 500 ETFs: How VOO Compares to SPY on Fees, Yield, and Risk was originally published by The Motley Fool