Quick Verdict
- Choose VOO if: you are a long-term, buy-and-hold investor who wants the lowest possible cost for S&P 500 exposure.
- Choose SPY if: you trade frequently, use options, or need the deepest intraday liquidity.
- Key difference: both funds track the same index with near-identical holdings, but VOO charges 0.03% a year versus 0.0945% for SPY.
- Winner for most investors: VOO, because the lower fee is a certain, compounding advantage and SPY’s liquidity edge rarely matters to buy-and-hold investors.
Table of Contents
VOO vs SPY: Key Differences at a Glance
Both funds hold the S&P 500, so the differences come down to cost, structure, and trading characteristics. Data is as of October 2026.
| Feature | VOO | SPY |
|---|---|---|
| Full name | Vanguard S&P 500 ETF | State Street SPDR S&P 500 ETF Trust |
| Issuer | Vanguard | State Street Investment Management (SPDR) |
| Benchmark | S&P 500 Index | S&P 500 Index |
| Inception | Sep 7, 2010 | Jan 22, 1993 |
| Structure | Open-end fund | Unit Investment Trust (UIT) |
| Expense ratio | 0.03% | 0.0945% |
| Dividend frequency | Quarterly | Quarterly |
| Dividend yield (12-mo trailing) | ~1.06% | ~0.99% |
| AUM | ~$1.03 trillion | ~$817 billion |
| Average volume | ~7.1M shares/day | ~42.9M shares/day |
VOO is the cheaper fund and has a slightly higher yield. SPY is the older fund, with roughly six times the daily trading volume.
Expense Ratio Comparison
VOO charges 0.03% a year, while SPY charges 0.0945%. The 0.0645-point gap looks small, but it is a certain cost that compounds every year.
On a $10,000 position, VOO costs about $3 annually and SPY about $9.45, a difference of roughly $6.45. On $100,000, the figures are $30 versus $94.50, so SPY costs about $64.50 more each year.
The drag grows over decades. Assume a hypothetical 7% annual gross return on $100,000 held for 30 years, with no contributions or withdrawals. After fees, VOO would grow to roughly $754,800 and SPY to roughly $741,300, a gap near $13,500. This is an illustration, not a forecast.
VOO is cheaper because Vanguard prices the fund aggressively as a low-cost provider. SPY still attracts buyers because its fee comes with the deepest trading liquidity and options market among ETFs. That matters more to active traders and institutions than to people who buy and hold.
If you plan to hold for many years, VOO’s lower fee may be the stronger consideration. If you trade often or rely on options, SPY’s market depth could offset its higher expense ratio.
Performance Comparison
Because both funds track the S&P 500, their returns have been nearly identical. As of October 2026, VOO has returned slightly more than SPY over every period shown.
| Period | VOO | SPY | S&P 500 Index |
|---|---|---|---|
| 1-Year | +15.70% | +15.60% | +15.74% |
| 3-Year (annualized) | +22.85% | +22.73% | +22.89% |
| 5-Year (annualized) | +13.75% | +13.65% | +13.79% |
| 10-Year (annualized) | +15.29% | +15.18% | +15.33% |
VOO has trailed the index by about 0.04 points per period, and SPY by roughly 0.14 points. The 0.10 to 0.12 point gap between the two is close to the 0.0645-point fee difference. Structural details, such as how the UIT handles dividends between payment dates, may account for part of the remainder.
These figures are historical. Past performance is not indicative of future results, and both funds will move with the S&P 500 in either direction.
Holdings and Portfolio Overlap
Both funds hold essentially all of the roughly 500 S&P 500 constituents at nearly identical weights, so the overlap is about 100%. Owning both adds no diversification.
| Holding | VOO | SPY |
|---|---|---|
| NVIDIA (NVDA) | 8.39% | 8.36% |
| Apple (AAPL) | 7.38% | 7.35% |
| Microsoft (MSFT) | 5.78% | 5.76% |
| Amazon.com (AMZN) | 3.71% | 3.70% |
| Alphabet Class A (GOOGL) | 3.07% | 3.05% |
Sector weights match just as closely. Technology is about 40.5% in both funds, followed by Financial Services at roughly 11%. Both are heavily concentrated in a handful of mega-cap technology names.
For investors, the holdings are not a reason to choose one fund over the other. The decision comes down to cost, structure, and how you plan to trade.
Liquidity and Options: Where SPY Stands Apart
SPY trades about 42.9 million shares a day, versus about 7.1 million for VOO. It also has the deepest options market of any ETF, which is why institutions and active traders often use it as a hedging and trading vehicle.
That liquidity can mean tighter execution for very large orders and more strike and expiration choices for options strategies. For short-term trading, those benefits may outweigh a fee difference that amounts to dollars per year.
VOO’s volume is still substantial for a long-term holder. It is an open-end fund, while SPY is a Unit Investment Trust, a structural difference that influences how each fund manages dividends and cash.
If you buy shares monthly and hold them for years, SPY’s extra liquidity may bring little practical benefit. If you trade in size or write options, it could be the deciding factor.
Which Is Better for You? Our Verdict
VOO may be the better choice if you:
- Invest for the long term and rarely trade
- Want the lowest ongoing cost on S&P 500 exposure
- Contribute regularly through a retirement or brokerage account
- Prefer a slightly higher trailing dividend yield (~1.06% vs ~0.99%)
- Value simplicity and do not use options
SPY may be the better choice if you:
- Trade actively or in large size
- Use options strategies on the S&P 500
- Need the most liquid S&P 500 ETF for hedging
- Work in an institutional setting where SPY is the standard instrument
- Already hold SPY and would face tax costs by selling
For most buy-and-hold investors, VOO could be the more efficient choice. It tracks the same index, has trailed it by less, and costs about 68% less per year. SPY’s advantages are real but concentrated among traders and institutions.
If your strategy depends on options or intraday liquidity, SPY may justify its higher fee. Otherwise, the cost difference is hard to ignore.
→ Read our VOO review | → Read our SPY review
Frequently Asked Questions
Is VOO better than SPY for long-term investors?
VOO may suit long-term investors better because it charges less and has tracked the index slightly more closely. Both hold the same stocks, so the gap comes from fees and structure. The difference is modest but compounds over time.
Can I hold both VOO and SPY?
You can, but it adds no diversification because both hold essentially the same S&P 500 stocks. Some investors hold SPY for trading and VOO for long-term holdings. For most people, one fund is enough.
Why is SPY more expensive than VOO?
SPY charges 0.0945% versus VOO’s 0.03%. SPY’s fee supports a fund built around very deep liquidity and a large options market. VOO is priced to compete on cost for long-term holders.
Which pays higher dividends, VOO or SPY?
VOO’s trailing 12-month yield is about 1.06% versus about 0.99% for SPY. On $100,000, that is roughly $1,060 versus $990 a year, before taxes. Both pay quarterly, and yields change over time.
Is SPY better than VOO for options trading?
SPY has the deepest options market of any ETF, with typically more strikes, expirations, and trading activity. That can make it more practical for active options strategies. VOO has options too, but with less depth.
Data as of October 2026. Sources: issuer websites and finance.yahoo.com.
Disclaimer: The information in this article is for educational and informational purposes only. It does not constitute financial, investment, or tax advice. Past performance is not indicative of future results. Investing in ETFs involves risk, including possible loss of principal. Always consult a qualified financial advisor before making investment decisions.