ETF Comparison

SPY vs VOO

Both track the S&P 500. Both hold the same 500 stocks. But one costs more than 3x the other.

Updated for 2026. Real expense ratios, real structural differences.

0.0945%

SPY Expense Ratio

0.03%

VOO Expense Ratio

TL;DR

For long-term buy-and-hold investors, VOO wins. It charges 0.03% vs SPY's 0.0945%, tracks the exact same index, and has a more modern, efficient fund structure. SPY only wins if you are an active trader or options trader who needs maximum liquidity.

Choose SPY if...

+You trade options and need the deepest options market
+You are a day trader who needs maximum liquidity
+You move large institutional-sized positions

Choose VOO if...

+You are a long-term buy-and-hold investor
+You want the lowest possible expense ratio
+You want a more tax-efficient fund structure
+You are investing in an IRA, 401(k), or taxable account for retirement

Side-by-Side Comparison

Same index. Different wrappers. Different costs.

Feature	SPY	VOO
Expense Ratio	0.0945% ($9.45 per $10,000/year)	0.03% ($3.00 per $10,000/year)Wins
Index Tracked	S&P 500	S&P 500
Inception Date	January 22, 1993 — the first ETF ever created in the U.S.	September 7, 2010 — Vanguard's entry to the S&P 500 ETF space
Fund Provider	State Street Global Advisors (SPDR)	Vanguard
Structure	Unit Investment Trust (UIT) — cannot reinvest dividends or lend securities	Open-End Fund — can reinvest dividends and lend securities for extra incomeWins
Daily Trading Volume	Highest of any ETF — the most liquid equity security in the worldWins	Very high, but roughly 1/3 to 1/2 of SPY's daily volume
Options Market	Deepest, most liquid options market of any ETF — the gold standard for options tradersWins	Growing options market but significantly less liquid than SPY options
Dividend Handling	Dividends held in cash until distribution (creates slight "cash drag")	Dividends can be reinvested immediately, reducing cash dragWins
Tax Efficiency	Very good, but UIT structure slightly less optimal	Excellent — open-end ETF structure is the most tax-efficient wrapperWins
Best For	Active traders, options traders, institutional investors needing maximum liquidity	Long-term buy-and-hold investors who want the lowest cost

VOO wins on cost and structure. SPY wins on liquidity and options. For buy-and-hold, VOO is the better choice.

A Brief History

SPY launched on January 22, 1993, making it the very first ETF listed in the United States. It was created by State Street Global Advisors and structured as a Unit Investment Trust (UIT) — the only legal framework available for ETFs at the time. This structure means SPY cannot reinvest dividends between distribution dates and cannot lend securities for additional income, both of which create a slight performance drag compared to modern ETFs.

VOO launched 17 years later on September 7, 2010. By then, the open-end fund structure for ETFs was well-established, and Vanguard built VOO as the ETF share class of its legendary 500 Index Fund (originally launched by Jack Bogle in 1976). This modern structure is more flexible and efficient, contributing to VOO's lower expense ratio.

Glen's Take

SPY is the original. It pioneered an entire industry and changed investing forever. But for actually investing your money? VOO is strictly better for long-term holders. Same 500 stocks, same index, better structure, lower cost. I hold VOO (and VTI). There is zero reason for a buy-and-hold investor to pay 3x the expense ratio for the same product.

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The Expense Ratio Math

SPY charges 0.0945% annually. VOO charges 0.03%. The difference is 0.0645% per year — or $6.45 per $10,000 invested. That sounds tiny, and on a small portfolio over a short time horizon, it is.

But this is an investing page, so let us think long-term. On a $100,000 portfolio held for 30 years, the compounding fee difference between SPY and VOO adds up to several thousand dollars. Not catastrophic, but why pay it when the alternative is free?

For context: both SPY and VOO are absurdly cheap compared to the average actively managed mutual fund (0.60-1.00%+). The real enemy is not SPY's 0.0945% — it is the 1%+ expense ratios that millions of investors still pay for funds that underperform the S&P 500. If you are choosing between SPY and VOO, you have already won the most important battle.

UIT vs Open-End Fund Structure

This is the structural difference that most comparisons skip. SPY is a Unit Investment Trust (UIT), while VOO is an open-end fund. Here is what that means in practice:

SPY (UIT)

-Cannot reinvest dividends — cash sits idle until distribution date
-Cannot lend securities to generate additional income
-Must fully replicate the index — cannot use sampling

VOO (Open-End)

+Can reinvest dividends immediately — reduces cash drag
+Can lend securities for additional income to offset costs
+More flexibility in index replication strategy

Frequently Asked Questions

Why is SPY more expensive than VOO if they track the same index?

SPY was the first ETF ever created (1993) and was structured as a Unit Investment Trust (UIT). This structure was chosen because it was the only legal framework available at the time. UITs have restrictions — they cannot reinvest dividends or lend securities — which makes them slightly less efficient. SPY's expense ratio of 0.0945% reflects this older structure. VOO (2010) uses a modern open-end fund structure that is more flexible and cheaper to operate. State Street has kept SPY's UIT structure because changing it would be extremely complex legally and could trigger tax events for existing holders.

Should I switch from SPY to VOO?

If you hold SPY in a taxable brokerage account, switching to VOO would mean selling SPY (potentially triggering capital gains taxes) and buying VOO. Whether this makes sense depends on your unrealized gains. If you have a large gain, the tax hit may outweigh decades of fee savings. If you hold SPY in a tax-advantaged account (IRA, 401(k)), you can switch to VOO without any tax consequences — and you probably should, since you will save 0.0645% per year with no downside. For new money, VOO is almost always the better choice for long-term investors.

Is SPY better for trading?

Yes. SPY has the highest daily trading volume of any ETF in the world and the most liquid options market. If you are an active trader or options trader, SPY's superior liquidity means tighter bid-ask spreads and better execution, especially for large orders. The slightly higher expense ratio is irrelevant for short-term trades — you are paying it pro-rata and holding for days or weeks, not years. For day trading and options strategies, SPY is the clear winner.

Do SPY and VOO have the same performance?

They track the same index (S&P 500), so their gross returns are virtually identical. The only performance difference comes from the expense ratio: SPY charges 0.0945% and VOO charges 0.03%. Over one year on a $10,000 investment, that is a difference of about $6.45. Over 30 years on a $100,000 investment, the compounding fee difference adds up to a few thousand dollars — meaningful but not life-changing. Both funds will give you S&P 500 returns minus their respective tiny fees.

What about IVV — the iShares S&P 500 ETF?

IVV (iShares Core S&P 500 ETF by BlackRock) is the third major S&P 500 ETF. It charges 0.03% — the same as VOO — and uses an open-end fund structure. For long-term buy-and-hold investors, IVV and VOO are essentially interchangeable. The choice between them often comes down to which brokerage you use. If you want the full three-way comparison, check our SPY vs IVV vs VOO page.

Why do people still buy SPY if VOO is cheaper?

Three main reasons: (1) Liquidity — SPY is the most-traded ETF in the world, which matters for large institutional trades and options strategies. (2) Options — SPY has the deepest options market of any ETF, making it essential for options traders. (3) Inertia — SPY has been around since 1993 and many investors, advisors, and institutions have used it for decades. For long-term buy-and-hold investors, there is no rational reason to choose SPY over VOO.

The Bottom Line

If you are buying and holding S&P 500 exposure for the long run, VOO is the better choice. Lower expense ratio, better fund structure, same 500 stocks. SPY is only superior for active traders and options traders who need its unmatched liquidity.

That said, if you already own SPY in a taxable account with large unrealized gains, do not rush to sell. The tax hit from switching may exceed decades of fee savings. For new money, though? VOO every time.

Both SPY and VOO are in the top 0.1% of cheapest funds ever created. You are splitting hairs between excellent options.

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