SPY vs. VOO: Which ETF Fund Is the Best?
Are you planning to invest in S&P 500 ETF funds? Confused about how to begin your research? No worries, all you need to do is put up your reading glass and read through this article. Here, you will be filled with all the necessary information regarding Voo vs. S&P 500. And, as you progress, you will be able to make the best investment decision for yourself.
When you talk about S&P 500 ETF funds, the two famous funds that pop into your mind might be Voo or Spy. Isn’t it? The Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 ETF Trust (SPY) are quite popular large-cap exchange-traded funds (ETFs) in the USA investment industry.
These funds track this index and aim to multiply its performance.
And you don’t have to worry about its management because Vanguard Advisors and State Street Global Advisors professionally manage it.
Table of Contents:
Introduction to ETFs
Exchange Traded Funds are a cluster of financial instruments like bonds, stocks, commodities, and anything else that is considered an investable asset. Its main work is to track any one of the indexes here, it tracks S&P 500. Many investors consider the USA as the biggest market for ETFs.
Founded in 1976, by Vanguard founder Jack Bogle but made its first debut in 1993 as SPDR S&P 500 ETF USA listed. According to Join Stein, Founder, and CEO at Betterment, “ETF portfolios will be the inevitable default for investors in the years to come because they are lower cost, more transparent, and offer greater liquidity and tax advantages than mutual funds.”
The table below showcases the popular U.S. Exchange Traded Funds.
| Exchange Traded Fund | Companies/Sector | Annualised Returns (5 Years) | Expense Ratio (NET) |
| Vanguard S&P 500 | Top 500 U.S. Companies | 9.08% | 0.07% |
| SPDR Dow Jones | 30 leading U.S. Companies | 8.92% | 0.16% |
| ISHARES Russell 2000 | Small-cap U.S. Companies | 2.89% | 0.19% |
| SPDR Technology | Technology | 18.40% | 0.13% |
| SPDR Healthcare | Healthcare | 14.75% | 0.13% |
| SPDR Consumer Staples | Consumer Staples | 6.62% | 0.13% |
| SPDR Gold Trust | Gold | 6.95% | 0.40% |
For people who want to diversify their investment, this could be the best option for doing so. ETFs could be considered a safer option for many investors as only market risk is involved in it. There are six kinds of it available in the investment market:
- Bond ETFs
- Currency ETFs
- Inverse ETFs
- Liquid ETFs
- Gold ETFs
- Index ETFs
Note: Here we will be discussing Index ETFs at length.
It is one of the most rapidly growing financial instruments in the history of the market of investment. You are armed with the basics of exchange-traded funds now. Let’s dig deeper into Spy vs. Voo so that you can decide whether it deserves a place in your portfolio or not.
What are Voo and Spy Stocks?
Both stock index funds track the S&P 500 index. These EPFs are identical in various aspects apart from the returns that overshadow Spy stocks. Voo is less expensive than Spy stocks, which is why it offers a bit higher returns than Spy. One of them, Spy Stocks is the oldest one while on the other hand Voo is not old enough.
Introduction to Voo
Vanguard S&P 500 operations are professionally managed by Vanguard Group. It was created on Sept. 7, 2010, as a less expensive EPF. One of the pioneers of the Financial Market, Warren Buffett, lauds the virtues of the Voo S&P 500 index.
It might sound astonishing to some investors that America’s population is just 4% of the world, but their market capitalization is a whopping 54%. It has the lowest expense ratio of 0.05 pc.
Both the EPF funds mirror the S&P 500. And more than 23.79 % of it is up to only 5 to 6 stocks. There are 506 companies held in the VOO, with an average market capitalization of $200.0 billion. Below is a list of holdings owned by Voo, which are also quite similar to Spy (As on May 29, 2023).
| Name | Weight % | Market Value |
| MSFTMicrosoft | 7.13% | $53.68B |
| AMZNAmazon.com, Inc. | 2.93% | $22.07B |
| NVDANvidia Corporation | 2.13% | $16.02B |
| GOOGLAlphabet Inc.Class A | 1.99% | $15.01B |
| BRK.BBerkshire Hathaway | 1.85% | $13.89B |
| GOOGLAlphabet Inc. Class C | 1.75% | $13.19B |
| METAMeta Platform, Inc. | 1.67% | $12.56B |
| XOMExxon Mobil Corp. | 1.52% | $11.44B |
| UNHUnitedHealth Group | 1.43% | $10.79B |
| TSLATesla Motors | 1.38% | $10.37B |
After going through this table, definitely, your curiosity in making an investment in Voo ETFs must have reached its peak. And if you are a regular investor, you must be aware of the success stories of these stocks.
Note: All the information provided is as of May 29, 2023.
Some statistical data about the VOO is as follows:
- Index it tracks: S&P 500 Index
- Issuer: Vanguard
- Number of Holdings: 506
- Inception Date: September 7, 2010,
- Net Asset Value (May 29, 2023): $385.93
- Expense Ratio:0.03%
- Distribution yield: 1.57%
- Competing ETFs: SPY, IVV, SPLG, SCHX
Before analyzing the difference between Spy and Voo, it is important to know its holding distribution.
The top 10 Equity Sector Holdings along with the percentage of funds of Voo are as follows:
- Technology Services: 19.02%
- Finance: 13.61%
- Health Technology: 11.91%
- Electronic Technology: 10.26%
- Retail Trade: 7.73
- Consumer Non-Durables: 6.27%
- Energy Minerals: 4.44%
- Producer Manufacturing: 3.73%
- Commercial Services: 3.44%
- Consumer Services: 3.30%
Technology leads the equity sector holdings and if you trace its history then it is leading for quite some time.
Introduction to Spy
SPDR S&P 500 S&P 500 operations are professionally managed by State Street Global Advisor. It is the first and the oldest ETF index fund formed in 1993.
Below is a list of holdings owned by Spy:-
| Name | Weight % | Market Value |
| AAPLApple Inc | 7.41% | $29.27B |
| MSFTMicrosoft | 7.04% | $27.80B |
| AMZNAmazon. com, Inc. | 3.04% | $12.01B |
| NVDANvidia Corporation | 2.72% | $10.75B |
| GOOGLAlphabet Inc. Class A | 2.11% | $8.33B |
| GOOGAlphabet Inc. ClassC | 1.85% | $7.31B |
| METAMeta Platforms, Inc. | 1.66% | $6.54B |
| BRK.BBerkshire Hathaway | 1.64% | $6.48B |
| TSLATesla Motors | 1.48% | $5.83B |
| UNHUnited Health Group | 1.28% | $5.05B |
There could be a nominal shift in the holdings with time and date. You can view the holdings chart of the past few months Apple Inc is dominating this for a long time.
Some statistical data about the Spy is as follows:
- Index it Tracks: S&P 500 Index
- Issuer: State Street Global Advisor
- Number of Holdings: 505
- Inception Date: January 22, 1993,
- Net Asset Value ( May 29, 2023): $420.40
- Expense Ratio:0.09%
- Dividend Yield: 1.55%
- Competing ETFs: VOO, IWB, SPLG, SCHX
- Last Dividend Ex-Date: March 17, 2023
- Distribution Yield: 1.54%
The top 10 Equity Sector Holdings along with the percentage of funds of Spy are as follows:
- Technology Services: 18.89%
- Electronic Technology:18.27%
- Finance: 11.97%
- Health Technology: 10:30%
- Retail Trade:7.28%
- Consumer Non-Durables:5.36%
- Energy Minerals:3.72%
- Producer Manufacturing: 3.44%
- Consumer Services:3.44%
- Commercial Services:3.05%
Readers must be noticing that technology is leading this sector’s distribution. And you can give credit to the advancement of the digital world for this.
Note: Data might differ due to differences in time and date.
Why is Spy More Popular Than Voo?
Let’s find a precise answer to why Spy is more popular than Voo. A few reasons are as follows:-
- Spy is a UIT (Unit Investment trust), and dividends are taxed as regular income on it, whereas Voo is an ETF (qualified dividends).
- Due to the popularity and fascinating ability of the ticker symbol, Spy captivates more user attention.
- It has options expiring every two days, while it takes a week for Voo options.
- These funds possess high volume.
- Users find it difficult to locate ideal price points on Voo.
- The Spy fund enjoys the privilege of being the first S&P 500 index fund.
- Many people use Spy as a synonym for S&P 500.
- Numerous users feel that it is easy to go in and out of Spy ETF.
- It possesses tight spreads and options are highly liquid.
Readers by now may have understood the reasons why is Spy more popular than Voo.
Similarities In Spy Stock vs. Voo Stock
Spy and Voo stocks are quite identical, and there are several reasons for it. Let’s just cruise through these reasons one by one.
- Both the funds are ETF funds and are large-cap funds.
- These ETFs play a role as a helper in order to support and raise S&P 500.
- They hold a large part of core holding because of their conservative nature.
- It provides security stability and fewer fluctuations because of its large size.
- Users can analyze that Spy Stock vs Voo Stock possesses identical investment objectives.
- They provide very closely knitted returns.
- These funds are index funds, which are one of the most reliable financial instruments.
- You can also move in and out of these funds quite smoothly.
- Many investment experts suggest them to be the largest contributor to S&P 500 and due to that they are also synonymously called S&P500.
- Spy Stock and Voo Stock both dominate the technology sector.
By now, readers might have understood clearly the similarities between Spy Stock vs Voo Stock. And can decide whether to buy each of these stocks or a combination of both.
If you can understand the similarities between these stocks, let’s just tunnel deeper into the difference between Voo and Spy to have a brief knowledge of these stocks.
Difference In Spy & Voo ETF
These ETF funds could be identical, but can’t replace each other. So, let’s draw an insightful comparison between Spy vs. Voo with the help of the table given below.
| Basis | Voo | Spy |
| Investment Management | Voo is managed by Vanguard. | Spy is managed by State Street Global Advisor. |
| Net Assets | $385.93 | $420.40 |
| Expense Ratio | A 0.03% expense ratio will benefit the fund and shareholders. | A 0.09% won’t benefit the fund or shareholder. |
| Liquidity | It is the third-largest liquid index fund. So, here it loses some brownie points, Spy Fund. | It is the first largest liquid index fund. So, precisely it overshadows the Voo in this context. |
| Cost | Voo ETFs and its services are less hefty on the pocket. | Spy ETFs and their services are quite hefty on the pocket. |
| Number of Holdings | 506 | 505 |
| Inception | Voo is not that old in the market of index ETFs. | Spy is the oldest and the first in the market of index ETFs. |
| Goodwill | It has earned a lot of goodwill from investors but is far behind Spy Funds. | It has been in the market for the longest time. So, that is the reason it has earned the trust and goodwill of investors. |
| Financial Independence | Voo lets investors have more financial independence because of its low commission and other charges. | The Spy does not let the investors of funds have more financial independence because of its high commission and other charges. |
Readers are now aware of the similarities and differences between the Voo and Spy. And can now introspect the information provided to them before making an investment decision.
In order to draw a conclusion, it is pivotal to study Voo vs. Spy performance. In order to simplify the understanding, the next section of the article, the performance of Spy vs. Voo is analyzed.
Comparison Between Voo vs. Spy Based on Performance
What do you think could be the major factor influencing the choice of ETF? Maybe we all are on the same page, that is performance. No investor is interested in buying non-performing assets. So, it is of utmost significance to thoroughly research the performance of these funds.
Given below table presents the performance of Voo vs. Spy ETFs.
| Performance (as of 30/05/23) | Voo | Spy |
| 1 Month Return | 1.03% | 0.98% |
| 3 Month Return | 6.44% | 6.41% |
| 2023 YTD | 10.31% | 10.25% |
Readers can witness from their own eyes that there is only a slight difference between the performance of both ETFs. It depends on the user’s needs and preference for which share they want to favor or add to their portfolio.
Note: All returns over 1 year are annualized. The returns represented are total returns.
Though there is no major difference in performance that we can take into account, Voo has statistically outnumbered Spy funds. If the readers only take decisions based on performance, then Voo ETF is the clear-cut winner.
Wrapping Up: Which ETF Fund is the Best
There would be open-ended, a good deal of advice that people will give you on investment. But rather than listening to them and losing your hard-earned money is not an option. All you have to do is your research, and that should include data-specific research.
Based on data and research, what could be concluded is Voo ETF is the best fund available for investment as it involves less cost and almost identical returns to Spy ETF.
Even the legendary business magnate suggested investing in Voo funds rather than running after stock and price chasing. The higher returns of 10.31% and a lower expense ratio of 0.03% make it the best fit for investment. Readers might not agree with this because Spy is the ancestor of Voo and due to this it has earned goodwill in the market. But investment is a matter of choice for the investor so, they can decide upon it of their own will.
Sources:
2. SPDR S&P 500 Trust ETF By Wikipedia.
