VOO vs SPY vs IVV: Which S&P 500 ETF Is Actually the Best?

Three ETFs. Same index. Same 500 companies. Same returns, to three decimal places. And yet "VOO vs SPY" is one of the most searched questions in investing. The short answer: for almost everyone reading this, VOO or IVV is the better choice. The longer answer — why, by how much, and when SPY still makes sense — is worth ten minutes of your time.

The Quick Answer

ETF

Issuer

Expense

Structure

Best For

VOO

Vanguard

0.03%

Open-end fund

Long-term investors

IVV

iShares (BlackRock)

0.03%

Open-end fund

Long-term investors

SPY

State Street (SPDR)

0.0945%

Unit investment trust

Active traders & institutions

If you're going to buy and hold for years, pick VOO or IVV. They're functionally identical.

If you're going to day-trade S&P 500 options or move very large positions in and out, SPY has the deepest liquidity in the world and that's worth the higher fee.

That's the entire decision in one paragraph. Everything else is detail.

What All Three Have in Common

All three ETFs track the S&P 500 Index — the 500 largest US-listed companies. Apple, Microsoft, Nvidia, Amazon, and Alphabet are the top holdings in every one of them. The top 10 positions represent about the same 35% of each fund's assets.

Their raw returns, year after year, are indistinguishable to the naked eye. Over a decade, they typically finish within a few hundredths of a percent of each other — and the small gap that does exist is almost entirely explained by the expense ratio difference.

So when we talk about "which is best," we're really talking about three things: cost, structure, and liquidity. Everything else is a tie.

Cost: The Only Thing That Matters Long Term

Here's the only meaningful difference in one sentence: SPY charges 0.0945% per year while VOO and IVV charge 0.03%.

That gap is 0.0645%. Over a long holding period, it's meaningful:

Portfolio Size

10 years

20 years

30 years

$10,000

~$84

~$222

~$433

$50,000

~$418

~$1,110

~$2,164

$100,000

~$837

~$2,221

~$4,328

$500,000

~$4,184

~$11,106

~$21,640

On a $100,000 portfolio held for 30 years, you pay State Street an extra ~$4,300 for the privilege of owning SPY instead of VOO or IVV. And you get exactly the same investment.

Why SPY Is More Expensive (And Why It Still Dominates)

First, it was here first. SPY launched on January 22, 1993, as the very first US exchange-traded fund. Institutions built their entire trading infrastructure around it.

Second, its liquidity is unmatched. SPY trades tens of millions of shares per day with bid-ask spreads that are often effectively zero. If you're a hedge fund moving $500 million in 30 seconds, SPY is where you do it.

Third, the options market. SPY has the deepest options chain of any ETF in the world.

A Structural Quirk: SPY Is a Unit Investment Trust

SPY is legally structured as a "unit investment trust" (UIT). VOO and IVV are structured as "open-end funds." Two practical consequences:

1. SPY can't reinvest dividends internally. Dividends have to sit in the trust until the next quarterly distribution. In a rising market, that's a small drag.

2. SPY can't lend out its shares. VOO and IVV can lend shares to short-sellers and pass the income through, effectively offsetting a tiny portion of their expense ratio.

VOO vs IVV: Splitting Hairs

Honestly, almost nothing. Over a decade, their returns are separated by rounding errors. Vanguard runs VOO; BlackRock runs IVV. Pick whichever your brokerage makes easier.

One practical note: if you're building a tax-loss harvesting strategy in a taxable account, owning both VOO and IVV is actually useful — you can sell one at a loss and immediately buy the other without triggering a wash sale.

Canadian Equivalents

If you're investing from Canada and looking for S&P 500 exposure in Canadian dollars:

VFV.TO — Vanguard S&P 500 Index ETF (Canadian-listed, unhedged). MER around 0.09%.

XUS.TO — iShares Core S&P 500 Index ETF. MER around 0.09%.

ZSP.TO — BMO S&P 500 Index ETF. MER around 0.09%.

These wrapper ETFs hold their US counterparts under the hood. If you're holding in an RRSP and want to avoid the 15% US dividend withholding tax, holding VOO directly is more tax-efficient. For a TFSA, the withholding tax applies regardless.

Which One Should You Actually Buy?

Long-term investor? → VOO or IVV.

Trading options or day-trading? → SPY.

Canadian investor using a TFSA? → VFV.TO, XUS.TO, or ZSP.TO.

Canadian investor using an RRSP and comfortable with USD? → VOO directly.

Can't decide between VOO and IVV? → Flip a coin. You'll wake up in 30 years within $500 of each other on a $100,000 portfolio.

The Bottom Line

All three are great products. For most people, VOO or IVV is the right answer. SPY is for traders. The more important message is that by the time you're arguing about which S&P 500 ETF to buy, you've already made the most important decision — that you're going to own the S&P 500. Which ticker you use to get there is a rounding error.