These Top S&P 500 ETFs Are Not the Same

The iShares Core S&P 500 ETF (NYSEMKT: IVV) and the State Street SPDR S&P 500 ETF Trust (NYSEMKT: SPY) both track the S&P 500 Index, but IVV stands out with a lower expense ratio, a higher yield, and greater assets under management.

Both IVV and SPY provide exposure to large-cap U.S. equities by tracking the S&P 500. This comparison explores which fund may appeal more to investors seeking efficient, low-cost access to the U.S. stock market, focusing on practical differences in cost, performance, risk, and portfolio structure.

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

IVV is more affordable, charging just 0.03% in annual fees compared to SPY’s 0.09%, and also offers a slightly higher yield, which may appeal to cost-conscious investors seeking the best possible net returns.

IVV tracks the S&P 500, providing exposure to 503 large-cap U.S. stocks. Top sector weightings include information technology (33%), financial Services (12%), and communication services (10%). Its largest positions are Nvidia (NASDAQ:NVDA) at 7.5%, Apple (NASDAQ:AAPL) at 6.5%, and Microsoft (NASDAQ:MSFT) at 4.9%. With 26 years of history, IVV offers a mature, straightforward approach with no leverage, currency hedging, or other structural quirks.

SPY offers nearly identical sector and holdings exposure, with the same top three companies and sector weights. Both funds are designed to mirror the S&P 500’s composition so that investors can expect virtually the same portfolio makeup and risk profile from either option.

For more guidance on ETF investing, check out the full guide at this link.

Clearly, not all index funds are built the same. Choosing which one to buy is an important decision, since it’s likely going to be the one you are going to use to grow your wealth for decades. Minor cost differences, as measured by the expense ratio, can add up over time.

IVV’s higher dividend yield is certainly a bonus, but investors shouldn’t make the yield their deciding factor. Yields can fluctuate with changes in price and sector weightings in these funds’ holdings. The expense ratio is where the rubber meets the road.

The value of selecting the fund with the lowest expense ratio is evident in looking at past returns. Over the last five years, IVV returned 81.12% (including dividends), beating SPY’s gain of 80.52%. Going back 10 years, the difference widens a bit further, with IVV up 280.9% to SPY’s 278.8%.

As long as IVV’s expense ratio is lower, that return difference will continue to widen over many years. For example, a $50,000 investment in IVV at its 2000 inception would be worth $371,140 today, compared to $357,230 in SPY. IVV would have made an investor $13,910 richer.

The cost difference is the single most important difference between these index funds. SPY usually gets all the attention since it has been around the longest. Still, IVV’s lower expense ratio gives it a massive edge in delivering superior returns to investors over the long term.

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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia and is short shares of Apple. The Motley Fool has a disclosure policy.

IVV vs. SPY: These Top S&P 500 ETFs Are Not the Same was originally published by The Motley Fool