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Mark Verwoert
- Last updated: March 6, 2026
Educational Disclaimer: The content on myinvestacademy.com is for educational and informational purposes only. We are not licensed financial advisors, and nothing in this article should be interpreted as professional investment, legal, or tax advice. Investing involves risk of loss. Always consult with a professional before making financial decisions.
Best S&P 500 ETFs in 2025: VOO vs SPY vs IVV Compared
The S&P 500 has delivered average annual returns of around 10% over nearly 90 years. Buying into it through a low-cost ETF is one of the most straightforward wealth-building strategies available to any retail investor. But there are dozens of S&P 500 ETFs on the market, and picking the wrong one can cost you more than you realise, especially over a 20 or 30-year holding period.
This guide covers the five best S&P 500 ETFs available right now: VOO, IVV, SPY, SPLG, and RSP. We explain how we selected them, give an honest review of each one, compare them side by side, and answer the questions we see asked most often by investors.
How We Select the Best S&P 500 ETFs
Not all S&P 500 ETFs are equal. They track the same index, but differences in fees, fund structure, liquidity, and tax efficiency can meaningfully affect your real-world returns. Here is what we look at before recommending any fund.
Expense Ratio
The expense ratio is the annual fee a fund charges, expressed as a percentage of your investment. It is deducted automatically from the fund’s performance each year. At $10,000 invested, a 0.03% expense ratio costs you $3 per year. A 0.0945% ratio costs $9.45. That gap looks small until you compound it over three decades. We prioritise ETFs with expense ratios below 0.10%.
Assets Under Management (AUM)
A fund with higher AUM is less likely to close, easier to trade, and signals broader institutional trust. Every ETF on this list holds at least $60 billion in assets. VOO crossed $1.5 trillion in 2025, making it the world’s largest ETF.
Liquidity
Liquidity determines how easily you can buy or sell shares without affecting the price. It shows up in the bid-ask spread: the tighter the spread, the less you lose on each trade. SPY leads the market with roughly $62 billion in average daily dollar volume. IVV and VOO are highly liquid for retail investors. SPLG and RSP are suitable for buy-and-hold investors but less appropriate for active trading.
Tracking Difference
Tracking difference measures how closely an ETF replicates the actual S&P 500 return. A lower tracking difference is better. IVV is consistently rated as the closest tracker among the three major funds. A fund with poor tracking can quietly drag your returns even if its expense ratio looks competitive.
Fund Structure and Tax Efficiency
SPY operates as a Unit Investment Trust (UIT). Under this structure, dividends paid by underlying holdings cannot be reinvested back into the fund. They sit in cash until a quarterly distribution. This creates a small but real cash drag on performance. VOO and IVV are open-end funds, which means they can reinvest dividends immediately and engage in securities lending for additional income. For long-term, taxable account investors, this structural difference matters.
Share Price and Accessibility
VOO and SPY both trade at $555 to $590 per share. Investors without access to fractional shares on their platform may find the lower share price of SPLG (around $66) more practical when starting out.
Top 5 Best S&P 500 ETFs
The funds below were selected based on expense ratio, AUM, liquidity, fund structure, and tracking precision. Four of them track the S&P 500 in the traditional market-cap weighted way. One takes a different approach worth knowing about. All five are accessible through standard brokerage accounts with no minimum investment beyond the share price.
1. VOO: Vanguard S&P 500 ETF
VOO is the most recommended S&P 500 ETF for long-term retail investors, and it is easy to see why. Launched by Vanguard in 2010, it now holds over $1.5 trillion in assets, making it the world’s largest ETF after overtaking SPY in 2025. Its expense ratio of 0.03% is tied for the lowest available, meaning you pay just $3 per year on every $10,000 invested.
Vanguard operates under a unique investor-owned model. There are no external shareholders to satisfy, which structurally aligns the company’s interests with those of fund holders. As an open-end fund, VOO reinvests dividends automatically and can participate in securities lending, both of which contribute to tighter tracking and marginally better long-run performance versus SPY. Morningstar awards VOO its top Gold Medalist rating. Since inception, it has posted an annualised return of approximately 14.8%.
Pros:
- Industry-lowest expense ratio at 0.03%, tied with IVV
- World’s largest ETF by AUM ($1.5 trillion+)
- Open-end fund structure with dividend reinvestment and securities lending
- Morningstar Gold Medalist rating
- Investor-owned structure through Vanguard’s unique model
Cons:
- Lower daily trading volume than SPY, less suitable for active traders or options strategies
- Holdings only updated monthly rather than daily
- Share price around $555 may require fractional shares for smaller investors
2. IVV: iShares Core S&P 500 ETF
IVV is managed by BlackRock, the world’s largest asset manager with $13.5 trillion under management globally. It has tracked the S&P 500 since 2000 and now holds more than $700 billion in assets. Its expense ratio matches VOO at 0.03%, and it operates as an open-end fund with dividend reinvestment and securities lending.
Where IVV stands out is tracking precision. It is consistently cited as having the tightest tracking difference relative to the actual S&P 500 index, which matters when the whole point of the fund is to replicate the index as closely as possible. IVV also updates its holdings daily, which gives it a transparency edge over VOO’s monthly updates. For investors using a taxable brokerage account, IVV’s potential capital gains exposure sits at just 2%, making it one of the most tax-efficient S&P 500 ETFs available.
Pros:
- 0.03% expense ratio, identical to VOO
- Tightest tracking difference of the three main S&P 500 ETFs
- Daily holdings transparency
- Strong tax efficiency in taxable accounts
- Open-end fund with dividend reinvestment and securities lending
Cons:
- Smaller AUM than VOO ($700 billion versus $1.5 trillion), though still very large
- Managed by a for-profit firm, unlike Vanguard’s investor-owned structure
- Less name recognition among casual retail investors than VOO or SPY
3. SPY: SPDR S&P 500 ETF Trust
SPY is the original. It launched in January 1993 as the very first US-listed ETF, and it has been the most traded ETF in the world ever since. With average daily dollar volume exceeding $62 billion, SPY’s liquidity is in a different class from everything else on this list. That makes it the go-to for institutional investors, hedge funds, and anyone running options strategies or needing to move large positions quickly.
For long-term, buy-and-hold investors, SPY is the weaker choice. Its expense ratio of 0.0945% is more than three times that of VOO or IVV. Its Unit Investment Trust structure means dividends cannot be reinvested, they sit in cash until the quarterly distribution date. Over years and decades, that adds up to meaningful underperformance versus funds of similar size with lower fees and better structure. SPY still holds around $712 billion in AUM, but it was overtaken by both VOO and IVV in 2025, largely because cost-conscious long-term investors have migrated to cheaper alternatives.
Pros:
- Highest liquidity of any ETF in the world, averaging $62 billion in daily dollar volume
- The deepest options market of any ETF, essential for hedging and income strategies
- Over 30 years of track record
- Tight bid-ask spreads enable large trades with minimal slippage
- Available on every major brokerage platform
Cons:
- Expense ratio of 0.0945%, more than three times higher than VOO or IVV
- UIT structure prevents dividend reinvestment and securities lending
- Long-term holders give up a meaningful amount in fees over decades
- Has lost its AUM ranking to both VOO and IVV due to the fee disadvantage
4. SPYM: SPDR Portfolio S&P 500 ETF
SPYM is one of the most overlooked ETFs in the S&P 500 category. Also managed by State Street Global Advisors, it tracks the exact same index as SPY but operates as an open-end fund at a dramatically lower cost. At 0.02%, SPYM has the lowest expense ratio of any major S&P 500 ETF on the market.
Its share price of around $80 makes it accessible for investors who either do not have fractional share access on their brokerage or prefer to start with smaller whole-share purchases. SPYM has been gaining traction on forums like Reddit’s r/personalfinance and Bogleheads as investors discover it functions as a direct SPY replacement at a fraction of the cost. AUM now sits above $65 billion, which is growing but still well below the top three funds.
Pros:
- Lowest expense ratio of any major S&P 500 ETF at 0.02%
- Low share price (around $66), ideal for investors without fractional share access
- Open-end fund structure with dividend reinvestment, unlike SPY
- Identical index exposure to SPY at significantly lower cost
- Growing AUM and increasing community recognition
Cons:
- Lower daily trading volume than VOO, IVV, or SPY
- Thin options market relative to SPY
- Smaller AUM (~$65 billion) compared to the three largest funds
- Less established brand recognition
5. RSP: Invesco S&P 500 Equal Weight ETF
RSP takes a fundamentally different approach to S&P 500 investing. Instead of weighting companies by market capitalisation, it assigns roughly equal weight (around 0.2%) to all 500 companies in the index. Apple and a mid-cap industrial company carry the same importance in the fund.
The reason this matters: as of early 2026, the five largest holdings in a standard cap-weighted S&P 500 ETF (Apple, Microsoft, Nvidia, Alphabet, and Amazon) represent approximately 28 to 30% of the entire index. Buying VOO or SPY means nearly a third of your money is concentrated in five technology companies. RSP eliminates that concentration entirely. It has historically outperformed cap-weighted S&P 500 ETFs during periods when smaller companies lead the market. It underperforms during strong mega-cap tech rallies, as seen in 2023 and 2024. The higher expense ratio of 0.20% reflects the additional rebalancing the equal-weight structure requires.
Pros:
- Eliminates mega-cap tech concentration (top 5 stocks represent ~30% of standard S&P 500 ETFs)
- True equal-weight diversification across all 500 companies
- Has historically outperformed cap-weighted ETFs during certain long-term periods
- Useful hedge against tech-driven downturns
- Over $60 billion in AUM, well-established and liquid
Cons:
- Highest expense ratio on this list at 0.20%, significantly above cap-weighted peers
- Underperforms during strong mega-cap tech rallies
- Frequent rebalancing can create additional tax drag in taxable accounts
- Returns differ from the standard S&P 500 benchmark, which some investors find confusing
S&P 500 ETF Comparison Table
| ETF | Ticker | Share Price (approx.) | Expense Ratio | AUM | Avg. Daily Volume | Best For |
|---|---|---|---|---|---|---|
| Vanguard S&P 500 ETF | VOO | ~$555 | 0.03% | $1.5T+ | High | Long-term investors |
| iShares Core S&P 500 ETF | IVV | ~$600 | 0.03% | $700B+ | High | Long-term / Tax-conscious |
| SPDR S&P 500 ETF | SPY | ~$590 | 0.0945% | $712B+ | Highest | Active traders / Options |
| SPDR Portfolio S&P 500 ETF | SPYM | ~$66 | 0.02% | $65B+ | Moderate | Budget-conscious beginners |
| Invesco S&P 500 Equal Weight ETF | RSP | ~$180 | 0.20% | $60B+ | Moderate | Diversification-focused investors |
What You Need to Know Before You Invest
Choosing between these ETFs is straightforward once you understand a few structural differences. The fees, fund types, and concentration dynamics below are what actually separate these funds in practice, not the index they track.
Is the S&P 500 Still Diversified?
This is one of the most debated questions in retail investing communities right now, and it is a fair one. The five largest companies in the standard S&P 500 index now account for roughly 28 to 30% of the total index. That means when you buy VOO or SPY, nearly a third of your money is automatically allocated to Apple, Microsoft, Nvidia, Alphabet, and Amazon (members of the Magnificent 7). Those are excellent companies, but calling this diversified is a stretch.
If this concerns you, RSP is worth a look. It spreads exposure equally across all 500 companies, giving no single company more than a 0.2% weight in the fund. The trade-off is a higher fee and underperformance during tech bull runs. There is no free lunch here, but knowing the concentration exists puts you in a better position to decide.
The fee Difference is Bigger than it Looks
A 0.06% difference in expense ratio sounds negligible. Run it forward and it is not. Take $100,000 invested over 30 years at a 10% annual return. With a 0.03% expense ratio, you end up with approximately $1.74 million. With a 0.0945% ratio, you end up with around $1.69 million. That is roughly $50,000 left on the table in fees, on one investment, over one lifetime. For most long-term investors, VOO or IVV are the better choices on this basis alone.
You Do Not Need More than One S&P 500 ETF
A recurring question on investing forums is whether to hold both VOO and SPY, or VOO and IVV together. The answer is no. They track the same 500 companies with the same weightings. Holding two of them creates identical exposure at double the fee drag. Pick one and stick with it. If you want genuine diversification beyond the S&P 500, look at international equity ETFs or small-cap funds, not a second S&P 500 fund.
SPY's Structure is a Real Disadvantage for Long-Term Holders
SPY was created as a Unit Investment Trust in 1993. Under that structure, dividends paid by the underlying 500 companies cannot be reinvested into the fund. They accumulate in cash until the next quarterly distribution. During that wait, that cash earns nothing. For a trader holding SPY for a few days or weeks, this is irrelevant. For someone holding for 20 years, it creates a measurable performance drag versus VOO or IVV, where dividends get reinvested immediately.
Conclusion
For most investors, the choice comes down to two funds: VOO or IVV. Both charge 0.03% annually, both are open-end funds, and both closely track the actual S&P 500 index. VOO has the advantage of scale and Vanguard’s unique ownership model. IVV has a slight edge in tracking precision and daily holdings transparency.
If you trade actively or use options, SPY is the only choice worth considering. If you are starting out with limited capital and no access to fractional shares, SPLG offers the same exposure as SPY at the lowest fee on the market and a share price that is easy to work with.
RSP belongs in a portfolio where you want genuine equal-weight diversification and are comfortable with a higher fee and returns that differ from the headline S&P 500 number.
One ETF is enough. Pick one that fits your situation, buy regularly, and let time do the work.
Share prices, AUM figures, and expense ratios are based on data from early 2026 and should be verified before publication. This article is for informational purposes only and does not constitute investment advice.
Frequently Asked Questions
For long-term, buy-and-hold investors, VOO and IVV are the top picks. Both charge 0.03% annually, operate as open-end funds, and reinvest dividends automatically. Morningstar rates VOO its highest Gold Medalist. IVV offers marginally tighter tracking to the actual index and daily holdings transparency. In practice, the difference between them is minimal over time. Either will closely match the S&P 500's long-run average return of around 10% per year while keeping costs near zero. If you use Vanguard as your primary brokerage, VOO makes the most sense. If you use most other platforms, IVV is equally strong.
All three track the same S&P 500 index and hold the same 500 companies in the same proportions. The differences come down to fees, fund structure, and liquidity. VOO and IVV charge 0.03% per year. SPY charges 0.0945%, which is more than three times higher. SPY is a Unit Investment Trust, which prevents it from reinvesting dividends or lending securities. VOO and IVV are open-end funds, making them more efficient for compounding over time. SPY's one genuine advantage is liquidity: with over $62 billion in average daily dollar volume, it is the dominant instrument for active traders and anyone running options strategies.
For most retail investors, VOO is the better long-term choice. The lower expense ratio and more efficient fund structure mean more of your return stays in your account over time. If you actively trade S&P 500 ETFs, use options, or need to move large positions in and out quickly, SPY is the right tool because nothing else comes close to its liquidity and options market depth. If you are a passive investor who buys regularly and plans to hold for years, the case for paying SPY's higher fee is weak.
No. Holding VOO alongside SPY or IVV gives you no additional diversification. You are buying the same 500 companies at the same weightings twice, while paying fees on both positions. One S&P 500 ETF is sufficient. If you want to diversify beyond the S&P 500, consider adding an international equity ETF or a total market fund rather than a second fund tracking the same index.
Any S&P 500 ETF charging more than 0.10% annually should be scrutinised. The best options on the market range from 0.02% (SPLG) to 0.03% (VOO, IVV). SPY at 0.0945% is the highest among the major trackers and is only justified if you need its specific liquidity advantages. For context, the average actively managed fund charges somewhere between 0.50% and 1.0%. Passive S&P 500 ETFs are dramatically cheaper, which is a large part of why they tend to outperform active funds over long periods.
Broadly, yes: it covers 500 companies across all 11 market sectors. But the cap-weighted structure creates meaningful concentration at the top. As of early 2026, the five largest holdings represent roughly 28 to 30% of the index. A standard S&P 500 ETF is partly a technology sector bet whether you intend it to be or not. If you want to avoid this concentration, RSP distributes exposure equally across all 500 companies, removing the dominance of any single stock or sector. The trade-off is a higher fee (0.20%) and performance that diverges from the standard S&P 500 benchmark.
You can buy any of the ETFs on this list through a standard brokerage account. Open an account with a provider such as Fidelity, Charles Schwab, or your local equivalent, search for the ticker (VOO, IVV, SPY, SPLG, or RSP), and place a buy order like you would for any stock. Most major brokerages no longer charge trading commissions on ETFs. If the share price of VOO (~$555) or SPY (~$590) is more than you want to spend per share, check whether your platform supports fractional investing, or consider SPLG, which trades at around $66 per share and provides identical S&P 500 exposure to SPY at an even lower fee.
References
- S&P Dow Jones Indices – (spglobal.com)
- Vanguard fund official fact sheets – (Vanguard)
- Morningstar ETF ratings – (Morningstar)
