SPY vs VOO: Which Is the Better Pick in 2026?

Overview

SPY and VOO are both index-tracking ETFs designed to replicate the S&P 500. They hold the same underlying securities—the 500 largest U.S. companies by market cap—and charge minimal fees. The key difference is cost: VOO's 0.03% expense ratio is roughly one-third of SPY's 0.09%, a gap that compounds over decades despite both funds tracking an identical index.

How they differ

SPY and VOO track the same index but at different cost levels. VOO's 0.03% expense ratio undercuts SPY's 0.09% by 6 basis points annually—a small number that translates to roughly $600 per $1 million invested per year in foregone returns. VOO is also significantly larger, with $1.42 trillion in assets under management versus SPY's $652 billion, which typically translates to tighter bid-ask spreads and better execution for retail investors. Their distribution rates are similar: VOO yields 1.09% versus SPY's 1.04%, both paid quarterly, so the income stream is nearly identical. SPY has a 33-year track record dating to 1993, while VOO launched in 2010; both maintain a beta of 1.0, meaning they move in lockstep with the broader market.

Who each is best for

SPY: Investors who value long fund history and established liquidity, or who may hold the fund in non-U.S. or institutional accounts where SPY's longer tenure and broader acceptance may matter.

VOO: Buy-and-hold investors prioritizing cost efficiency over a 10, 20, or 30-year horizon, or anyone funding a core portfolio position where the 6 basis point fee advantage compounds meaningfully.

Key risks to know

• Both funds carry market risk: they rise and fall with the S&P 500. A broad equity downturn affects both equally.
• Concentration risk applies to both: the S&P 500 is weighted by market cap, so the largest 10 companies represent roughly 30% of the index. Neither fund hedges this concentration.
• Fee drag, while small, is directional: SPY's higher expense ratio will slightly lag VOO over time, all else equal, in up markets and down markets alike.
• Tracking error is minimal for both but nonzero; SPY's slightly higher fees create a small annual performance gap favoring VOO.

Bottom line

If you're building a long-term core equity holding and cost efficiency is a meaningful factor—especially in tax-advantaged accounts where you'll hold for 15+ years—VOO's lower fee and larger asset base offer a material advantage. If you already own SPY or prefer its longer history and established reputation, the performance difference is small enough that switching may not justify the transaction costs. Past performance does not predict future results.