October 3, 2023

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Investments in mutual funds, index funds and ETFs (exchange-traded funds) are long-term investments and a fundamental part of any diversified portfolio. They are generally viewed as safer investments than individual stocks.

Many of these funds aim to track specific indexes. Two examples of this are VOO, which aims to track the S&P 500 market index, and SPY, which aims to follow the same index.

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Since they both track the same index, it can be difficult to figure out which investment may be better when deciding between SPY vs VAO. Below is a comparison of these two popular funds to help you decide.

Spy vs. Wu: Issuer

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When it comes to SPY vs VOO from an issuer’s perspective, you are dealing with two very large firms. VOO is issued by Vanguard, the largest issuer of mutual funds in the world. They are also the second largest issuer of ETFs. Needless to say, you can’t get this big without knowing what you’re doing.

State Street Global Advisors is the creator of the SPY (SPDR® S&P 500® ETF Trust) and has over $4.1 trillion in assets under management as of December 2021.

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Any issue is a big player in the issuance of mutual funds and exchange-traded funds, and neither is going anywhere anytime soon.

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Spy Vs Woo: The Underlying Index Followed

Sometimes funds try to track a particular index of the stock market. Some examples are the total stock market, the Dow Jones Industrial Average, and the NASDAQ 100.

As mentioned earlier, VOO and SPY aim to track the S&P500 market index. The S&P 500 aims to track the 500 largest publicly traded US companies. Market cap is the primary criterion for inclusion of a company in an S&P 500 index fund, but it is not the only criterion.

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Investing in the US top 500 companies would mean mostly large-cap stocks. However, there could be some mid-cap and small-cap investments as well.

Spy vs. Woo: Expense Ratio

Expense ratio can be an important information while deciding which fund to invest in. Even a small difference can add up to thousands of dollars when invested in a fund for 10 or 20 years.

Inevitably, with money managed, there are expenses with it. These expenses can be salaries to pay analysts or portfolio managers, management fees, rent for office space, and many more.

Many funds will pass some or all of these expenses onto you, the investor. The amount you will be paid will be shown as the expense ratio.

When looking at VOO and SPY, there is a significant difference in their expense ratios. While VOO carries very low costs of .03%, SPY has an expense ratio of around .09%. While .09% may seem small, it is about triple the VOO.

The amount you’ll pay in fees may seem small at just .06% difference, but over years and decades, it’ll add up to much more than you think.

Spy vs. Woo: Minimum Initial Investment

The Minimum Initial Investment (MII) will differ per fund and firm. The minimum initial investment is applicable only when you invest in a fund for the first time.

Many funds require anywhere from $100 – $5000 or more for your first investment. After that, you are free to invest in the same fund on subsequent investments as you wish.

The current MII of VOO is the Ask Price of a share on that trading day. To give you an idea, at the time of writing this, VOO stands at approximately $377 per share.

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SPY has a similar MII in that it will only charge the current price of a stock. Again, as of writing this, SPY stands at approximately $410 per share.

This is essentially a $33 margin just making your first trade, after that, you will be able to invest any amount you want.

Spy vs. Woo: Net Assets and Holdings

In this SPY vs VOO comparison, the top ten holdings of each fund are very similar, see below. Both hold around 30% share in their top 10 as well. Given that they both track the S&P 500 index, it should come as no surprise that roughly 99% of their holdings are the same.

Spy Top 10 Holdings

Woo Top 10 Holdings:

You will find a noticeable difference when it comes to the amount managed by each fund. VOO has more than $840 billion in assets under management, while SPY has approximately $417 billion in total assets.

Spy vs Wu: Creations

As you can imagine, when comparing SPY versus VOO in the composition of each fund, you’ll be hard-pressed to find much difference. As mentioned earlier, they both aim to track the same market index, hence they have the same overall fund structure.

Spy vs. Wu: Overall Performance

Of course, what most investors will put at the top of their criteria when determining which funds to invest in will be performance! When looking at the performance of both SPY vs VOO, they both do an excellent job of delivering very similar returns to the indexes they are supposed to track.

Given that both track the S&P 500 and have roughly similar holdings, they also have roughly similar returns and volatility.

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Spy Display:

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Woo Display:

img 62700b75dd932

With the low turnover for each fund, it is unlikely that the performance of these funds will ever differ by more than a few hundredths of a percent.

Spy Vs Woo: Which Is Better?

Before investing in any stock, mutual fund, or anything else, it is always a good idea to do your research. Whether it is short term investment or long term investment, you can never have too much information.

While making any investment, it comes down to what you are comfortable with and your investment strategy. The big factor in SPY vs VOO is not performance, as one will outperform the other. For me, it comes down to expense ratio.

It is possible that any fund may outperform another fund during any period. Which is better is anyone’s guess. However, the expense ratio is a known value, and in this case, VOO comes out as a clear winner.

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Spy vs. Wu: Final Thoughts

Both funds are backed by large asset managers at Vanguard and State Street Global Advisors. Either would make a good addition to your investment portfolio. Identical in almost every way, when it comes to most aspects of Spy vs VOO you’re basically splitting hairs.

Where the real difference comes in is the expense ratio, with SPY being three times that of VOO. That small amount may not seem like much, however, after 10, 20, or even 30 years of investment, it can mean thousands of dollars, if not more.


Jeff is a fan of all things finance. When he’s not out to change the world with his blog, you can find him running, watching a Mets game, or playing with his kids

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