I will make it easy for you to decide between$Vanguard S&P 500 ETF(VOO)$vs $SPDR S&P 500 ETF Trust(SPY)$
VOO vs SPY
The primary difference between VOO and SPY is the company that offers the ETF and its expense ratio.
VOO is offered by Vanguard with an expense ratio of 0.03%
SPY is offered by State Street Global Advisors Trust Company with an expense ratio of 0.09%
Both ETFs seek to track the returns of the S&P 500 Index.
This gives investors exposure to 500 of the largest companies in the United States and accounts for about three-quarters of the U.S stock market’s value.
VOO and SPY Performance
VOO and SPY have had the same performance over the last 1 year. This is because they both track the same index (S&P 500 index).
The total return for VOO over the last 1 year is 3.34% per year, same as SPY!
Here is a performance comparison for VOO and SPY for the past 10 years:
VOO vs SPY Holdings
VOO and SPY have almost the same holdings. Both SPY and VOO are broad-based funds diversified in several sectors of the market.
Here are both the top 10 VOO and SPY Holdings:
Which is Better VOO or SPY?
SPY and VOO are very similar investments because they track the same index. However, VOO is better because it has a lower expense ratio of only 0.03%.
The higher the expense ratio, the lower the return for the investor and the more money for the management company.
Differences in expense ratio and brokerage commissions can add up over time and result in less money in your portfolio.
The expense ratio difference between VOO and SPY is 0.06% (0.09% – 0.03%).
Although insignificant, the 0.06% difference can directly affect your overall returns. Overtime, this could add up.
Final Thoughts:
Investing is never an easy task. There can be a lot of psychological barriers that may interrupt things like a bear market or even costs. The fear of missing out or even losing money can create different thoughts when coming to investing.
If you want to start then choose one of these ETFs. SPY and VOO can do wonders for your portfolio.
Share your thoughts, which one would you choose? SPY or VOO and why?
Disclaimer: The article above is for reference/information only and does not constitute any buy-sell recommendation.
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