SPY vs VOO: The S&P 500 ETF Showdown

Same Index, Different Price Tag

SPY and VOO both track the S&P 500. They hold the same 500 companies in essentially the same proportions. Their daily returns are nearly indistinguishable. And yet their expense ratios are wildly different: SPY charges 0.0945% while VOO charges 0.03%.

That doesn't sound like much. But on a $100,000 portfolio held for 10 years, the difference compounds to roughly $300 in extra fees you pay to hold SPY instead of VOO. On $1 million over 30 years, it's real money.

So why does anyone buy SPY? There are actual reasons, and they matter depending on how you invest.

The Background

SPY (SPDR S&P 500 ETF Trust) launched in 1993, making it the oldest US ETF. It was revolutionary at the time. VOO (Vanguard S&P 500 ETF) launched in 2010, about 17 years later. Vanguard's cost structure, built around serving fund shareholders rather than outside investors, allowed them to undercut SPY on fees from day one.

SPY is managed by State Street Global Advisors. VOO is managed by Vanguard. Both are reputable, enormous, and have never come close to any kind of operational issue.

The Numbers

	SPY	VOO
Index tracked	S&P 500	S&P 500
Expense ratio	0.0945%	0.03%
AUM	~$500B+	~$550B+
Avg daily volume	Very high	High
Options market	Enormous	Smaller

SPY's AUM and daily trading volume are among the highest of any ETF on earth. It trades billions of dollars per day. VOO is also massive, but SPY's liquidity is in a different league.

Why Traders Choose SPY

SPY dominates for anyone who trades frequently, hedges with options, or works in institutional investing.

Options liquidity. The SPY options market is the most liquid options market in the world. Tight bid-ask spreads, deep open interest at every strike, and weekly expiries make SPY the de facto tool for S&P 500 options strategies. VOO has an options market, but it's a fraction of the size. If you're trading covered calls, protective puts, collars, or any derivative strategy, SPY is the better vehicle. Intraday trading. For short-term traders, SPY's volume means you can move large positions without moving the price. The bid-ask spread on SPY is routinely 1 cent or less. On VOO, spreads are slightly wider for smaller-scale traders. Short selling. SPY shares are widely available to borrow. Hedge funds use SPY shorts as hedges against equity portfolios. This availability and ease of borrowing makes SPY the preferred tool for institutional hedging.

Why Long-Term Investors Choose VOO

If you're buying and holding, the math favors VOO.

Lower ongoing cost. The 0.0645% annual difference means VOO wins by that amount every year, compounded. It's not dramatic in any single year but it adds up consistently over decades. Dividend reinvestment efficiency. Vanguard's fund structure (unique to Vanguard ETFs) can reduce drag from dividend reinvestment compared to SPY's trust structure. The difference is small but real. No practical liquidity disadvantage. For investors buying monthly or quarterly, SPY's superior intraday liquidity simply doesn't matter. The fill you get on VOO at market open is essentially equivalent.

The Expense Ratio Difference in Real Terms

Let's be concrete. On $100,000:

• VOO annual cost: $30
• SPY annual cost: $94.50
• Annual difference: $64.50

Over 10 years, assuming 8% annual growth, that $64.50 annual difference compounds to roughly $950 in extra value retained in VOO vs SPY. On $500,000, that's nearly $5,000 over 10 years.

The longer you hold and the larger your position, the more VOO's cost advantage matters.

The Bottom Line

Buy SPY if: you trade actively, use options, hedge positions, or have institutional reasons to use SPY. Buy VOO if: you're a buy-and-hold investor building long-term wealth. The lower expense ratio is a guaranteed, permanent advantage.

For most people reading this, VOO is the answer. But if you're already in SPY and the position is in a taxable account, think carefully before switching -- the tax bill on a large unrealized gain might exceed the savings from lower fees.

Compare Them Yourself

See the historical performance difference, including how the expense ratio gap shows up over multiple time horizons.

Compare SPY vs VOO on StockResearch

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This post is for informational purposes only and does not constitute financial advice. Expense ratios and AUM figures are approximate. Always verify current data before investing.