VOO vs SPY: Same Index, a Very Different Fee

For a buy-and-hold investor the comparison comes down to cost, because both funds track the same S&P 500 index. VOO charges 0.03% a year against SPY at 0.0945%, so a $100,000 holding pays about $30 a year in VOO and about $94.50 in SPY. For active traders, SPY has advantages VOO does not: higher trading volume, the deepest options market of any ETF, and very tight bid-ask spreads.

SPY launched in January 1993 as the first US-listed ETF and was built as a unit investment trust, an older legal structure with licensing and trustee costs baked in, and its fee has stayed at 0.0945%. Its core users are traders and institutions moving in and out quickly, for whom a few basis points of annual fee matter far less than liquidity and spreads. VOO arrived in 2010 competing directly for long-term investors, where the annual fee is the deciding factor.

Yes. Both track the S&P 500, so they hold the same companies in the same market-cap weights. Reported line counts differ by a handful (State Street listed 504 holdings for SPY as of 2 July 2026) because some S&P 500 companies have more than one share class and funds carry small transition positions. The stock exposure is functionally identical, which is why the returns track each other so closely.

Liquidity. SPY is among the most heavily traded securities in the world, with penny-wide bid-ask spreads and the largest, deepest options market of any ETF. Traders running short-term strategies, hedges or options positions value that execution quality far more than a fee difference measured in hundredths of a percent per year. None of those advantages compound for someone who buys and holds for decades.

VOO runs slightly ahead: about 1.1% trailing yield versus about 1.0% for SPY as of early July 2026. The gap partly reflects the fee difference, since fund expenses come out of income, and partly SPY structure: as a unit investment trust it must hold dividends in cash between quarterly distributions rather than reinvesting them, a small drag in rising markets. Yields move with the market, so treat both figures as dated snapshots.

It depends on the account. Inside a 401(k) or IRA, selling one S&P 500 fund to buy a cheaper one has no tax consequences. In a taxable brokerage account, selling SPY can realize capital gains and create a tax bill that outweighs years of fee savings, so many investors leave existing SPY alone and simply direct new money to a lower-cost fund. This is general information, not personal or tax advice.

It works; it is simply costlier than the alternatives. SPY delivered about 15.5% a year over the decade to 31 May 2026 (past performance does not guarantee future results), essentially matching its index minus fees. The issue is that VOO delivers the same S&P 500 exposure for 0.03% instead of 0.0945%, and an annual cost gap of about $65 per $100,000 compounds over decades. SPY earns its fee for traders; buy-and-hold money does not use what it is paying for.