The S&P 500 ETF Decision
Choosing an S&P 500 ETF is one of the most common decisions in investing. There are four major options — SPY, VOO, IVV, and SPLG — all tracking the exact same index. They hold the same 500 stocks in the same weights. So why does it matter which one you pick?
The differences are small but meaningful: fees, structure, liquidity, and share price. For a long-term investor, the right choice can save you thousands of dollars over decades. Here's how to choose the best S&P 500 ETF for your situation.
Quick Comparison: SPY vs VOO vs IVV vs SPLG
All four funds track the S&P 500 and hold identical stocks. Here's where they differ:
SPY (SPDR S&P 500 ETF Trust) — Expense ratio: 0.0945%. The original ETF, launched in 1993. Highest liquidity, tightest spreads, most options activity. Uses an older unit investment trust (UIT) structure. Best for active traders and options investors.
VOO (Vanguard S&P 500 ETF) — Expense ratio: 0.03%. Launched in 2010 by Vanguard. Modern open-ended fund structure. Lower fees than SPY, excellent tracking. Best for long-term buy-and-hold investors.
IVV (iShares Core S&P 500 ETF) — Expense ratio: 0.03%. Launched in 2000 by BlackRock/iShares. Same fee structure as VOO. Strong liquidity, just below SPY. Best for iShares platform investors.
SPLG (SPDR Portfolio S&P 500 ETF) — Expense ratio: 0.02%. State Street's low-cost alternative to SPY. Lowest expense ratio and lowest share price. Best for investors without fractional share access.
How to Choose an S&P 500 ETF: Expense Ratio
The expense ratio is the most important differentiator. SPY charges 0.0945%, while VOO, IVV, and SPLG charge 0.03% or less. That gap might sound tiny, but it compounds.
On a $100,000 investment over 30 years (assuming 10% annual returns), the fee difference between SPY and VOO costs you roughly $12,000 in lost returns. That's money that stays in your pocket with the cheaper fund. For a deeper understanding of how fees affect returns, see our expense ratio guide.
SPY's higher fee exists because of its older legal structure and because it doesn't need to compete on price — it dominates through liquidity and brand recognition.
How to Choose an S&P 500 ETF: Liquidity
Liquidity is where SPY shines. It's the most traded ETF in the world, with daily volume often exceeding 50 million shares. Its bid-ask spread is consistently just $0.01, meaning your trading costs are minimal.
VOO and IVV are also highly liquid — daily volumes in the millions of shares with tight spreads. For any normal investor buying and holding, all three are perfectly liquid. You'll never have trouble buying or selling.
SPLG has lower daily volume, but it's still sufficiently liquid for individual investors. The slightly wider spread (a few cents) is a negligible one-time cost if you're holding for years. Use the ETF Beacon comparison tool to see current liquidity metrics.
How to Choose an S&P 500 ETF: Fund Structure
SPY uses a unit investment trust (UIT) structure, which has two practical drawbacks. First, it can't reinvest dividends between distribution dates, creating a small cash drag. Second, it can't lend securities as efficiently, reducing a potential income source.
VOO, IVV, and SPLG use the modern open-ended fund structure, which allows dividend reinvestment and more efficient securities lending. This structural advantage is one reason why VOO and IVV sometimes have slightly better tracking than SPY despite identical benchmarks.
This difference matters, but it's already reflected in the long-term performance numbers. Don't overthink it.
How to Choose an S&P 500 ETF: Share Price
Share price matters most if your broker doesn't support fractional shares. As of early 2026, SPY trades around $550+, VOO around $520+, IVV around $570+, and SPLG around $65. If you're investing small amounts without fractional shares, SPLG lets you buy whole shares with less cash.
With fractional shares available, share price becomes irrelevant. You can invest any dollar amount in any of these ETFs regardless of per-share cost.
Which S&P 500 ETF Is Right for You?
Here's the simple decision framework:
Choose VOO or IVV if: You're a long-term investor who buys and holds. You want the lowest fees with excellent tracking and plenty of liquidity. This covers 90% of investors.
Choose SPY if: You're an active trader, use options strategies, or need the absolute deepest liquidity. SPY's options market is unmatched — the tightest spreads and most strike prices of any ETF.
Choose SPLG if: You want the absolute lowest expense ratio, or you need a low share price because your broker doesn't offer fractional shares.
For most investors reading this guide, VOO is the default recommendation. It combines rock-bottom fees with Vanguard's investor-first ethos and strong liquidity. But honestly, you can't go wrong with any of these four. The difference between them is far smaller than the difference between investing and not investing.
Beyond the S&P 500: Should You Go Broader?
Before committing to an S&P 500 ETF, consider whether you actually want the total stock market instead. VTI holds the S&P 500 plus mid-cap and small-cap stocks — over 3,500 holdings total — at the same 0.03% expense ratio. See our VTI vs VOO comparison for a detailed breakdown.
The S&P 500 represents about 80% of the total US market by capitalization. VTI gives you the other 20% — smaller companies that historically deliver higher returns with more volatility. For a long-term investor, total market exposure is arguably the more complete choice.
If you want to explore more options, browse S&P 500 ETFs on the S&P 500 ETF type page on ETF Beacon.
