Spy vs voo dividend

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SPY vs. VOO: Head-To-Head ETF Comparison

The table below compares many ETF metrics between SPY and VOO. Compare fees, performance, dividend yield, holdings, technical indicators, and many other metrics to make a better investment decision.


Some important comparison metrics here are expense ratio, issuer, AUM, and shares outstanding, among others. Furthermore, ADV in the 11th and 12th row, which stands for Average Daily Volume, can help investors avoid illiquid ETFs.


Compare the number of holdings, all ETF holdings, asset allocation, and much more. Each asset class has unique holdings data. For instance, only equity ETFs will display sector and market cap breakdown, among other equity fields. Bond ETFs on the other hand, will display the type of bond, coupon breakdown, credit quality, and more bond specific metrics.

Technology Services%
Electronic Technology%
Health Technology%
Retail Trade%
Consumer Non-Durables%
Consumer Services%
Producer Manufacturing%
Consumer Durables%
Energy Minerals%
Health Services%
Process Industries%
Commercial Services%
Industrial Services%
Distribution Services%
Non-Energy Minerals%
Technology Services%
Electronic Technology%
Health Technology%
Retail Trade%
Consumer Non-Durables%
Consumer Services%
Producer Manufacturing%
Consumer Durables%
Health Services%
Process Industries%
Energy Minerals%
Commercial Services%
Industrial Services%
Distribution Services%
Non-Energy Minerals%
Market CapPercentage
Market CapPercentage
North, Central and South America%
North, Central and South America%
United States%
United Kingdom%
United States%
United Kingdom%

ESG Scores

ESG Scores represent how an ETF's constituents, in aggregate, manage ESG risks and opportunities. Compare ESG metrics across multiple themes including environmental, social, governance and morality.

ESG Score
ESG Score Peer Percentile (%) %%
ESG Score Global Percentile (%) %%
Revenue Exposure to Environmental Impact (%)
Severe Environment Controversies (%)
Sustainable Impact Solutions (%) %%
Revenue Exposure to Social Impact (%)
SRI Exclusion Criteria (%) %%
Severe Governance Controversies (%)

Environmental Responsible Scores

Weighted Average Carbon Intensity (Tons of CO2e / $M Sales)
Fossil Fuel Reserves (%)
High Impact Fossil Fuel Reserves (%)
Water Stress High Risk Business Segment (%)
Water Stress High Risk Geography (%)
Water Stress Exposure Moderate (%)
Water Stress Exposure High (%)
Water Stress Exposure Low (%)
Revenue Exposure to Energy Efficiency (%)
Revenue Exposure to Alternative Energy (%)
Revenue Exposure to Green Building (%)
Revenue Exposure to Pollution Prevention (%)
Revenue Exposure to Water Sustainability (%)

Socially Responsible Scores

Revenue Exposure to Affordable Real Estate (%)
Revenue Exposure to Education (%)
Revenue Exposure to Major Disease Treatment (%)
Revenue Exposure to Nutrition (%)
Revenue Exposure to Sanitation (%)
Revenue Exposure to SME Finance (%)
Human Rights Norms Violation (%)
Human Rights Norms Violation OR Watch List (%)
Severe Human Rights Controversies (%)
Labor Norms Violation (%)
Labor Norms Violation OR Watch List (%)
Severe Labor Controversies (%)
Severe Customer Controversies (%)
Global Compact Compliance Violation (%)
Global Compact Compliance Violation OR Watch List (%)
Catholic Values Fail (%)
Islamic Non-Compliant (%)
Adult Entertainment Involvement (%)
Alcohol Involvement (%)
Gambling Involvement (%)
Nuclear Power Involvement (%)
Tobacco Involvement (%)
Weapons Involvement (%)
Controversies Weapons Involvement (%)
Civilian Firearms Involvement (%)
Civilian Firearms Retailer (%)
Civilian Firearms Producer (%)
Direct Predatory Lending Involvement (%)
Genetic Engineering Involvement (%)

Responsible Governance Scores

Board Flag (%)
Lack of Independent Board Majority (%)
Board Independence (%) (%)
Board Independence (%) (%)
Board Independence (%) (%)
Board Independence (%) (%)
No Female Directors (%)
Three OR More Female Directors (%)
Females Represent 30% of Directors (%)
Entrenched Board (%)
Overboarding (%)
Negative Director Votes (%)
Ownership AND Control Flag (%)
One Share One Vote (%)
No Annual Director Elections (%)
Does Not Use Majority Voting (%)
Significant Votes Against Pay Practices (%)
Controlling Shareholder (%)
Controlling Shareholder Concerns (%)
Cross Shareholdings (%)
Poison Pill (%)
Pay Flag (%)
No Pay Performance Link (%)
Lack of Internal Pay Equity (%)
Executive Pay Non-Disclosure (%)
Accounting Flag (%)


In addition to weekly, YTD and yearly returns, this section features the ETF’s beta, P/E ratio, dividend data, and risk metrics. Risk adjusted return comparisons can be made with the help of beta and standard deviation on this page.

1 Week Return %%
2 Week Return %%
4 Week Return %%
13 Week Return %%
26 Week Return %%
YTD Return %%
1 Year Return %%
3 Year Return %%
P/E Ratio
Annual Dividend Rate $$
Dividend Date
Dividend $$
Annual Dividend Yield % %%
5 Day Volatility %%
20 Day Volatility %%
50 Day Volatility %%
Day Volatility %%
Standard Deviation %%


Most of the main technical indicators are available to compare here. This includes moving averages, MACD, RSI, bollinger bands, support and resistance levels, and more. Compare these to figure out the best entry points from a technical setup perspective.

20 Day MA $$
60 Day MA $$
MACD 15 Period
MACD Period
Williams % Range 10 Day
Williams % Range 20 Day
RSI 10 Day
RSI 20 Day
RSI 30 Day
Ultimate Oscillator
Lower Bollinger Band (10 Day) $$
Upper Bollinger Band (10 Day) $$
Lower Bollinger Band (20 Day) $$
Upper Bollinger Band (20 Day) $$
Lower Bollinger Band (30 Day) $$
Upper Bollinger Band (30 Day) $$
Support Level 1 $$
Support Level 2 $$
Resistance Level 1 $$
Resistance Level 2 $$
Stochastic Oscillator %D - 1 Day
Stochastic Oscillator %D - 5 Days
Stochastic Oscillator %K - 1 Day
Stochastic Oscillator %K - 5 Days


Compare the ETF’s asset class metrics, region exposure, structure, inception date and many more important database factors in the table below.

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  • Additional export capabilities to Excel or csv on any type, category, issuers, or index page.

Analyst Take

Here’s what our ETF Database analysts have to say about SPY and VOO.


SPY is one of the largest and most heavily-traded ETFs in the world, offering exposure to one of the most well known equity benchmarks. While SPY certainly may have appeal to investors seeking to build a long-term portfolio and include large


This ETF tracks the S&P Index, one of the most famous benchmarks in the world and one that tracks some of America&#;s largest companies. As a result, investors should think of this as a play on mega and large cap stocks in the American market. These

Realtime Ratings

The ETF Database Realtime Ratings allow advisors and investors to objectively compare ETFs based on ratings of six key metrics as well as an Overall Rating.

Name SPDR S&P ETF TrustVanguard S&P ETF
Liquidity N/AN/A
Expenses N/AN/A

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Sours: https://etfdb.com/tool/etf-comparison/SPY-VOO/


In my previous article, I implemented a Monte Carlo simulation on a dollar-cost averaging strategy in Python. I examined two S&P exchange-traded funds (ETF) to see what kind of returns investors can expect over time. When I first looked at the time-series for the two funds (SPY and VOO), I saw that the curves were nearly identical with a slight share price offset.

It got me thinking whether there wasany discernable difference between the two funds. Does it matter which one I buy? To an average investor, most wouldn’t bat an eye and just choose one without much thought. And of course, after some research, I found that it’s often echoed that it didn’t matter which one you buy since both are made up of the same companies with similar asset holdings. The only major difference was in the expense ratios (the cost of owning the fund), where VOO costs %, while SPY is %.

Just as a review, an S&P ETF is a fund that is made up of the largest companies on the stock market. However, not every company is given equal weight in the fund (percent of asset holdings). For example, the top five holdings in SPY and VOO are currently Microsoft, Apple, Amazon, Facebook, and Alphabet (Google), which happen to also be the largest companies in the US and the world by market capitalization. Together these five companies out of make up nearly 20% of the fund’s total assets. The allocations between the top five holdings are fairly different but nearly identical between funds.

With such similarity, it shouldn’t matter which one I buy. Just for good measure, let’s take a closer look at how this translates into the real world with an analysis in Python.

SPDR S&P ETF Trust (SPY) and Vanguard S&P ETF (VOO) adjusted close share price data were pulled from Yahoo! Finance. The date range was limited to 9/9/ (the first data point available for VOO) and the current date to give a comparison since SPY has been trading since

import datetime
import calendar
import pandas as pd
import pandas_datareader.data as web# Start date
start_date = datetime.datetime(,9,9)# Today’s Date
end_date = datetime.date.today()# Pull Data
df_spy = web.DataReader(‘SPY’,’yahoo’,start_date, end_date)
df_voo = web.DataReader(‘VOO’,’yahoo’,start_date,end_date)# Adjusted Close Price dataframe
df_both['SPY'] = df_spy['Adj Close']
df_both['VOO'] = df_voo['Adj Close']

Daily Price Difference

As we saw in the first figure, there seemed to be a share price offset between the funds. When I took the difference between both share prices for each day, we see that there is an increase in the difference over time. Nine years ago, SPY was only $10 more than VOO. Today, the difference is % greater at $ On the other hand, in that same time, we can see the valuation of both stocks have tripled.

This is a good start but it only shows us raw price changes. It may be more useful to look at percent changes.

Day-to-Day Percent Change

We can look at the day-to-day changes in percentages to analyze how the daily stock price fluctuations behaved. Using a simple percent change calculation, we can get a distribution of change between the two funds relative to SPY.

Based on this, it is clear that there is essentially no difference in how these stocks change on the daily. Looks like there is a 50–50 chance of seeing either fund increase more than the other on any given day. However, even if one increased more than the other, with the relative percent change, we see that there is very little difference between the two funds on daily fluctuations (within +/- %).

Year-to-Year Percent Change

But how about the long-term, since most of us would be buying these funds expecting them to appreciate over time and not day-trading them. I redid the calculations and looked at the year-to-year percent change for shares prices on dates one year apart.

For the 1-year time span, the central tendency for SPY relative percent change shifted a little towards the negative side around %. This leads to VOO seeing a greater percent increase year over year for an overwhelming majority of the time. This is vastly different than the day-to-day percent changes we saw before where both funds had an equal number of increasing periods.

5-Year Percent Change

As we increase the investing duration to a 5-year period, we can see that VOO beats SPY in almost every 5-year period. There are only a few 5-year periods in the historical data where SPY beats VOO, and even those were barely greater than 0% difference. The average relative percent change continues to shift more negative, meaning SPY is consistently “underperforming” (increasing less) when compared to VOO. Seems like VOO gets slightly better over time.

When we compare the statistics between 1-day, 1-year, and 5-year periods, the average percent change between SPY and VOO increases in order of magnitude as investment duration increases. The median 1-day percent change differences manifest as %, while the 1-year and 5-year periods increase to % and %, respectively. Range and standard deviation also increase as duration increases.

Lastly, I extended the duration to the maximum given by the dataset from 9/9/ to the current date and found that SPY increased % while VOO increased %, resulting in a % difference over 10 years.

So what does this all mean? Which one is better? Which ETF should I buy? After looking at the data from different angles, there is very little difference between SPY and VOO in the short term. Day-to-day changes between the stocks are nearly identical. However, extending an investing period to 1 year and even 5 years amplify minor differences into more substantial ones. Even though the average 5-year percent change between SPY and VOO is only %, it can be a significant amount of money in practicality. An investment of $, of SPY would be $, in VOO. Over an entire lifetime or career and depending on the initial investment, this can potentially be even more than an extra few thousand dollars for retirement. Regardless, potential investors can feel at ease buying into either one due to the similarity.

If you’re interested in viewing my code, please check it out on my GitHub!

And if you found this interesting or informative, please check out my other analysis where I look into how QQQ (NASDAQ ETF) stacks up against SPY. I also did an analysis of dollar-cost averaging with Monte Carlo simulations.

Sours: https://towardsdatascience.com/spy-vs-voo-is-there-any-differencedefc2c3f3
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Best S&P ETFs for Q4

The S&P is a market-cap-weighted index of large-cap U.S. stocks, representing approximately 80% of the market value of the U.S. stock market. Often synonymous with "the market" in the U.S., the S&P is the closest thing to a default U.S. stock index. Its largest components by weight are mega-cap stocks such as Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), class A shares of Facebook Inc. (FB), and class A shares of Alphabet Inc. (GOOGL). The S&P was the benchmark of the first index fund, and the first ETF. An S&P ETF is an inexpensive way for investors to gain diversified exposure to the U.S. stock market, though it has been unusually volatile in the past year amid the coronavirus pandemic and massive disruptions in the global economy.

Key Takeaways

  • The S&P is a market-cap-weighted index of large-cap U.S. stocks.
  • The index has a % trailing 1-year total return.
  • The S&P ETFs with the lowest fees are SPLG, VOO, and IVV.
  • The highest-liquidity ETF is SPY.

There are 4 ETFs tracking the S&P that trade in the U.S., excluding inverse and leveraged funds. The S&P has provided a total return of % over the past 12 months, as of Aug. 30, Below, we look at the least expensive S&P ETFs for buy-and-hold investing and the most liquid one for more active traders. There is a three-way tie between the least expensive funds, an indication of just how intense the price war is as ETF issuers compete to both retain and add investors. All numbers below are from ETFdb.com and as of Aug. 30,

S&P ETF with the Lowest Fees: SPDR Portfolio S&P ETF (SPLG) (Tie)

Because index-tracking ETFs follow the performance of the S&P index, one of the most important determinants of long-term returns is how much a fund charges in fees.

  • Expense Ratio: %
  • Performance over 1-Year: %
  • Annual Dividend Yield: %
  • 3-Month Average Daily Volume: 1,,
  • Assets Under Management: $ billion
  • Inception Date: Nov. 8,
  • Issuer: State Street

S&P ETF with the Lowest Fees: Vanguard S&P ETF (VOO)(Tie)

  • Expense Ratio: %
  • Performance over 1-Year: %
  • Annual Dividend Yield: %
  • 3-Month Average Daily Volume: 3,,
  • Assets Under Management: $ billion
  • Inception Date: Sept. 7,
  • Issuer: Vanguard

S&P ETF with the Lowest Fees: iShares Core S&P ETF (IVV) (Tie)

  • Expense Ratio: %
  • Performance over 1-Year: %
  • Annual Dividend Yield: %
  • 3-Month Average Daily Volume: 4,,
  • Assets Under Management: $ billion
  • Inception Date: May 15,
  • Issuer: BlackRock Financial Management

Most Liquid S&P ETF: SPDR S&P ETF (SPY)

Liquidity indicates how easy it will be to trade an ETF, with higher liquidity generally translating to lower trading costs. Trading costs are not a big concern with people who want to hold ETFs long term. But if you’re interested in trading ETFs frequently, then it’s important to look for high-liquidity funds to minimize trading costs.

  • 3-Month Average Daily Volume: 60,,
  • Performance over 1-Year: %
  • Expense Ratio: %
  • Annual Dividend Yield: %
  • Assets Under Management: $ billion
  • Inception Date: Jan. 22,
  • Issuer: State Street

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Sours: https://www.investopedia.com/investing/top-spetfs/
Should I Buy S\u0026P 500 ETF SPY vs IVV vs VOO (2020)

What's The Best S&P ETF? SPY vs VOO vs IVV

ETF concept

According to the latest stats, 92% of professional fund managers are unable to beat the market.

In this case, "the market" refers to the S&P -- an index of large publically traded companies in the US. This means that even most professional stock pickers are unable to get higher returns than this popular index.

This is no easy feat, because the S&P has actually returned % per year on average over the past few decades. Of course, this included various periods of volatility where it may have dropped % or more before eventually moving higher.

The chart below shows that if you invested $10, in the S&P in the year , it would have turned into $, today:

10k invested in spx

Source: Ycharts.

When this kind of return compounds over time, it can build up to substantial wealth if you simply buy and hold for years and decades.

For this reason, many legendary investors like Warren Buffett recommend that most people don't even try to pick individual stocks. Instead, they should put their money into an index fund that tracks the S&P

This is like buying a "basket" of the companies in the S&P, as if you owned shares in all of them.

It is simplest to do this by buying an exchange-traded fund (ETF) that tracks the S&P index. These ETFs are financial products that hold shares of all the companies in the index, but the ETF shares are traded just like stocks.

They also pay you a dividend every three months, which can be reinvested to buy more shares of the ETF. This increases the compounding effect of your investment as both the price of the ETF and the number of shares you own are growing over time.

That being said, the ETF and index fund space is crowded and there are several popular options to choose from.

This article looks at the three most popular S&P ETFs -- SPY, VOO and IVV -- and at the end tells you which one you should choose.


  • Expense ratio: %
  • Dividend yield: %
  • Assets under management: $ billion

The SPDR S&P Trust ETF (SPY) is the world's biggest exchange-traded fund, with a whopping $ billion invested in the fund at the time of this writing.

SPY was launched in , which makes it the oldest ETF on the US market. It has returned an impressive % per year since inception.

Despite having a slightly higher expense ratio than VOO and IVV, it is actually preferred by active traders because of its high trading volume. 78 million shares of SPY are traded every day, compared to under 5 million per day for VOO and IVV.

This means that it is easy to buy and sell large amounts of SPY without it moving the price of the ETF much. So people can get in and out of their trades quickly without much extra cost in the form of slippage.

In addition, options for SPY are highly liquid and have very low bid-ask spreads, which makes it the preferred S&P ETF for options traders.

VOO: Vanguard S&P ETF

  • Expense ratio: %
  • Dividend yield: %
  • Assets under management: $ billion

The Vanguard S&P ETF (VOO) is offered by Vanguard, a company founded by a legendary investor called Jack Bogle. He pioneered passive investing via index funds, which dramatically changed the investing landscape.

VOO has a very low expense ratio of % and has returned an average of % since inception in

IVV: iShares Core S&P ETF

  • Expense ratio: %
  • Dividend yield: %
  • Assets under management: $ billion

The iShares Core S&P ETF (IVV) is offered by iShares, a family of ETFs managed by Blackrock. This company is the world's biggest asset manager with about 6 trillion under management.

IVV has returned an average of % since its inception in The reason this is lower than both SPY and VOO is because the returns from were very poor with two massive bear markets.

I don't know why it has a higher reported dividend yield than SPY or VOO, but this seems to be some kind of error in the way the yield is measured.

All 3 ETFs Have Very Similar Returns

The table below shows the 1-, 3- and 5-year returns for the three ETFs.


As you can see, these ETFs all have almost the exact same returns. But VOO and IVV should have a % higher annual growth rate compared to SPY because of the lower expense ratio.

The chart below compares the annual returns for each of the ETFs since (blue is SPY, red is VOO, yellow is IVV).

As expected, the returns are pretty much identical.

SPY VOO IVV annual returns

Source: portfoliovisualizer.com

Which S&P ETF to Choose?

As you can see from the stats and charts, there really is no big difference between the returns for these S&P ETFs.

The most important difference is the expense ratio, since VOO and IVV are slightly cheaper than SPY and should have a % higher compound annual growth rate. This can make a small difference in returns if you buy and hold for several decades.

That being said, you may want to check with your broker and see if they offer any of these ETFs without commission charges.

If that is the case, then the commission-free ETF will likely be your best choice as the money you save on commissions will far outweigh the savings on the expense ratio.

If you are actively trading the ETF or trading options on it, then SPY will be best as it has the highest volume, tightest bid-ask spreads and the least slippage.

Here's a simple summary of which one to choose:

  • If you are an active trader or options trader, choose SPY.
  • If you plan to buy and hold, choose VOO or IVV.
  • If your broker offers any of them commission-free, then choose that one.

I personally chose VOO as my go-to S&P ETF since I like Vanguard as a company and am proud to do business with them. But you would get the exact same returns with IVV.

Sours: https://stockanalysis.com/what-is-the-best-spetf/

Voo spy dividend vs

S&P ETFs: What Every Investor Should Know

The S&P is probably the most accurate quantifier of the U.S. economy, measuring the cumulative float-adjusted market capitalization of of the nation’s largest corporations. While other benchmark indices measure merely stock prices, which can be limiting, the S&P has been hailed as the market standard against which many funds are compared.

With the advent of exchange-traded funds in the late s, it seemed only natural to create an ETF comprised of proportionate ratios of the stocks featured on the S&P In fact, the very first ETF ever created indeed tracked the S&P in such a fashion. While that ETF was quickly sued out of existence, in , investment management company State Street Global Advisors developed an equivalent ETF, the Standard & Poor’s Depositary Receipts (SPY).

Better known by its arachnoid acronym, SPDR, it’s the largest and most heavily traded ETF in the world, with net assets of $ billion. In fact, SPDR has spawned a whole family of ETFs known as SPDR funds, each of which focuses on a particular geographic region or market sector.

Key Takeaways

  • The three most popular ETFs that track the S&P are offered by State Street (SPDR), Vanguard (VOO), and iShares (IVV).
  • While all three ETFs have differing expense ratios, they are all considered very low compared to the industry average.
  • Most importantly, it should be noted that the three ETFs differ upon their strategy of reinvestment or payment of dividends.

SPDR Explained

Since its debut, the SPDR S&P ETF (henceforth “SPDR”) has bought and sold its components contingent on the changing roster of the underlying S&P index. That means SPDR has to trade out a dozen or so components a year depending on the latest ranking of companies, then rebalance. Some of those components get bought out by other companies, and some lose their place on the S&P by failing to meet its stringent criteria. When that happens, State Street sells off the outgoing index component (or at least, removes it from its SPDR holdings) and replaces it with the new one. The result is an ETF that tracks the S&P close to perfection.

As the definitive S&P ETF, SPDR has inspired a couple of imitators. Vanguard has its own copycat S&P fund, the Vanguard S&P ETF (VOO), as does iShares' Core S&P ETF (IVV). With net assets of over $ billion and $ billion, respectively, they along with SPDR dominate this market of funds that aren’t necessarily low-risk, but that at least move in tandem with the stock market as a whole.

All that being said, one S&P ETF should be as good as the next, shouldn’t it? If only. As almost every person who has ever built a fortune knows, you accumulate wealth by spending less of it. That brings us to expense ratios.

Mind the Expense Ratio

State Street charges an expense ratio of %, which is almost triple Vanguard’s %. iShares' comparable ETF has an expense ratio of %. That seems to make the answer obvious, if the question is “Which S&P ETF should I buy?”

If only it were that simple. Whether it’s by virtue of originality, size, or some other factor, SPDR shares are by far the most heavily traded of any S&P ETF. They trade dozens of times as frequently as do Vanguard or iShares S&P ETF shares, making it easy for a prospective seller to convert their holdings to cash. Then again, a thinly traded S&P ETF still trades close to a million units a day. You might have to wait a few hours to be completely liquid, rather than a few minutes. Unless you think you might need to pay a hostage ransom at some point in the near future, that’s little reason to shift out of iShares and into SPDR.

Furthermore, even a % expense ratio is vanishingly low. It’s easy to find mutual funds whose expense ratios are 20 times that number. Granted, the latter category consists of funds that require some degree of active management, as opposed to just tracking the stocks that make up an index whose components are selected by a third party.

UIT Versus ETF

Another more important difference between SPDR and the other two S&P ETFs is that the first is technically a unit investment trust. Here’s where being an early mover can be a disadvantage; SPDR is bound by an antiquated legal structure that didn’t foresee the creation of myriad ETFs. State Street thus must keep all the shares it purchases in-house. Vanguard’s and iShares’ S&P ETFs are set up differently and are allowed to lend their shares to other firms and earn concomitant interest. 

Five hundred stocks in a portfolio mean several hundred dividend payments, too. Rather than deliver those dividends to investors all year long, which would be more than a little cumbersome, SPDR holds the dividend payments in cash and doles them out upon distribution. iShares reinvests the dividends, which is beneficial in a bull market. Meanwhile, Vanguard invests its daily cash in its own ultra-low-risk investment vehicles.

The Bottom Line

For those who reject the concept of beating the market, or the work entailed therein, investing in an S&P ETF makes sense. Be patient and you’ll track the market note-for-note. Best of all, the investment firms have already performed the task of purchasing the proper amounts of each component of the S&P , bundled them into a unit, and made them available in small enough slivers that anyone who wants a piece can buy one. For the modest expense ratios given, given there's no bear market, that’s an excellent bargain.

Sours: https://www.investopedia.com/articles/investing//spetfs-what-every-investor-should-know.asp
Should I Buy S\u0026P 500 ETF SPY vs IVV vs VOO (2020)

SPY vs. VOO vs. IVV: There IS A Difference Between These S&P ETFs

Investors love their S&P ETFs. Three of the four largest ETFs in the marketplace today - the SPDR S&P ETF (SPY), the iShares Core S&P ETF (IVV) and the Vanguard S&P ETF (VOO) - all track the biggest large-cap index. The ETF industry has taken in $ billion year-to-date. $69 billion of that total has gone to just these three ETFs alone. It's safe to say that investors love their S&P ETFs in the core of their portfolio, although I still prefer the Vanguard Total Stock Market ETF (VTI) because it's a little more expansive in its coverage.

It might be easy to assume that because they all track the S&P and they're so large, they're interchangeable. For the most part, that's true. For the average investor who just wants to have a core portfolio position in their IRA or (k) or whichever account they choose and wants to just hold it indefinitely, you'll get essentially the same performance out of all three (or the differences will be razor thin at least). It's a decision you really don't have to (or shouldn't) overthink.

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But it'd be a mistake to say that they actually ARE identical. There will be a small subset of investors for which one of these three ETFs will be preferable over another. To find out if you're one of those investors, it all comes down to fee structures.

SPY vs. VOO vs. IVV

There are two components to an ETF's overall cost structure. Most people only look at a fund's expense ratio when considering cost, but you really need to look the expense ratio and trading spread together. One is the cost of fund management and the other is the cost of trading shares. Both come directly out of your pocket.

Let's start by taking a look at just the expense ratio of all three of these ETFs side by side.

SPY is the biggest of the bunch and charges % annually (technically, it's % but we'll just round it off). IVV and VOO come in much lower at just %.

In the grand scheme of things, 6 basis points per year isn't going to move the needle in any major way. It's a total difference of $6 a year for every $10, invested. Unless you're investing hundreds of thousands of dollars or more, the difference is probably negligible. Still, if you're starting out from scratch and trying to decide which one to open up a new retirement account with, for example, there's no reason why you probably shouldn't choose the lower cost VOO or IVV. After all, if you can grab a little more in total return, why wouldn't you?

But, again, the expense ratio is only one part of the equation. In reality, your trading behavior is going to do more to influence which of these funds may be better for you than the expense ratio alone.

We've looked at the expense ratios. Now, let's look at the trading spreads.

The first thing I notice when looking at this graphic isn't the average spread. It's the average daily volume.

IVV and VOO trade about $ billion worth of shares daily. SPY trades more than $25 billion. Why such a difference? Reputation is one factor. SPY was the first ETF ever created and in the minds of investors is usually the first ticker that comes to mind when thinking of the S&P It's perhaps a minor detail, but the "SP" part of the SPY ticker also makes it easier to make the connection to the S&P IVV and VOO don't have that tie-in.

The bigger factor is liquidity. SPY is the trading vehicle of choice of big institutions. They go for SPY because it's incredibly liquid, incredibly easy to trade and has perhaps the lowest trading cost in the industry. Really big block trades have the potential of moving the share price of smaller ETFs and that's generally not a concern with a product like SPY.

The average trading spread rounds down to 0% for all three, but there is a difference if you look at the average cost in absolute terms. SPY costs $ per share and IVV/VOO come in at $ That actually makes SPY less costly to trade than the other two and why it's the preferred ETF for large institutional traders. For the average trader, it's immaterial (the $ per share difference on a $ share price makes no difference).

While the SPY/IVV/VOO battle is about minor differences, you can quickly see why considering trading costs in addition to expense ratios is important.

Let's look at an example that makes the delineation a little more clear.

The newly launched Engine No. 1 Transformation ETF (VOTE) is an ESG play on the large-cap universe. Setting aside the differences in targeting for the moment, we see that the fund has an expense ratio of %. That would seemingly make it a more cost-effective choice than SPY for broad large-cap coverage.

But since VOTE is such a new fund, it's very thinly traded and that means higher trading costs. According to ETF Action, the latest spread on VOTE is %. If you're making a single trade in VOTE and holding that position for a full year, your total cost would be % (% expense ratio plus % trading spread). SPY would come in at % (% expense ratio and % trading spread). Despite the higher expense ratio, SPY comes out ahead on total cost. If you plan on holding for longer than one year, the calculus changes, but you get the idea.


Admittedly, this exercise is kind of like splitting hairs for S&P ETFs, but it's a good exercise to go through in trying to determine how two seemingly similar funds can be a little different.

In the end, it comes down to whether or not you're a frequent trader. If the trading spread differences are greater between two funds, going with the fund with the higher expense ratio may still make more sense than going with the cheaper ETF when trading costs are considered.

If you're a long-term buy-and-hold investor, choosing the ETF with the lower expense ratio probably makes more sense in most cases. If you plan on trading a lot and moving in and out of positions frequently, the total cost of ownership is something you need to consider.

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Sours: /etffocus/

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