The Vanguard S&P 500 ETF (NYSEMKT: VOO) achieved a remarkable milestone on June 3, as reported by Bloomberg, by surpassing $1 trillion in net assets. This significant threshold indicates that investors are entrusting more than $1 trillion to this single exchange-traded fund. VOO has emerged as the preferred method for ETF investors to gain exposure to the S&P 500 index, which comprises the 500 largest publicly traded companies in the United States.
Notably, in February 2025, VOO claimed the title of the world’s largest ETF, exceeding the assets held by the State Street SPDR S&P 500 ETF Trust (NYSEMKT: SPY), a well-known competitor currently managing over $781 million. Both funds are respected within the investment community for offering low-cost, diversified exposure to major U.S. corporations. While both VOO and SPY hold nearly identical stock portfolios and yield comparable returns, subtle differences could sway investor preference.
One of the key advantages of the Vanguard S&P 500 ETF is its extremely low expense ratio, which stands at just 0.03%. This minimal cost allows everyday investors to hold the entire S&P 500 index within their portfolios. As of April 30, the fund holds 505 stocks, representing firms that have issued multiple classes of shares. Since its inception in September 2010, VOO has achieved annualized returns of approximately 15.2%. The top five sectors included in the ETF are information technology (35%), financials (12%), communication services (11%), consumer discretionary (10%), and industrials (8.8%). The leading stocks within the fund are major technology players: Nvidia (7.85%), Alphabet (6.52%), Apple (6.45%), Microsoft (4.9%), and Amazon (4.2%).
On the other hand, SPY, which was launched back in January 1993, has delivered annualized returns of 10.75% over its 33 years of existence but comes with a higher expense ratio of 0.0945%. While SPY also tracks the S&P 500, its intricacies may appeal more to professional traders and institutions, given its higher daily trading volume of around 45.2 million shares compared to VOO’s 6.1 million. SPY further allows for options trading, which may not be beneficial for the average long-term investor.
When deciding between these two ETFs, consider that asset size alone does not determine performance. Both options ultimately provide similar exposures and returns over time, making them suitable choices for anyone looking to invest in the S&P 500. Factors such as availability on trading platforms or retirement accounts may also influence the decision-making process. However, for those prioritizing lower fees and straightforward access, VOO stands out as an exceptional choice.
Additionally, those contemplating investments in SPY should be aware of alternative opportunities. The Motley Fool’s Stock Advisor analysis team has recently highlighted ten stocks that they believe offer substantial growth potential, not including SPY. Historically, certain recommendations from Stock Advisor, such as Netflix and Nvidia, have delivered significant returns for investors.
In summary, the Vanguard S&P 500 ETF continues to set records and presents a low-cost solution for gaining access to the U.S. equity market, while the State Street SPDR S&P 500 ETF Trust offers features that cater to more active traders. The decision ultimately hinges on individual investment goals and preferences.
