The Vanguard S&P 500 ETF (VOO) recently surpassed $1 trillion in assets under management, cementing its position as the world’s largest exchange-traded fund tracking the S&P 500.

The achievement reflects the growing popularity of low-cost index investing and Vanguard’s long-standing emphasis on minimizing fees for investors.

VOO overtook the SPDR S&P 500 ETF Trust (SPY) in early 2025 to become the largest ETF globally, marking a significant shift in the competitive landscape of passive investing.

Despite their different providers, both funds seek to accomplish the same objective: delivering the performance of the S&P 500 Index, which tracks 500 of the largest publicly traded companies in the United States.

Nearly Identical Performance

For investors focused on market exposure, the differences between the two funds are minimal.

Over the past five years, VOO generated a total return of approximately 79.17%, while SPY delivered 79.15%.

Both funds own essentially the same underlying holdings and are heavily weighted toward the largest technology companies driving today’s market performance.

As of recent portfolio disclosures, the largest holdings include Nvidia, Alphabet, Apple, Microsoft, and Amazon, reflecting the growing influence of artificial intelligence and technology-related businesses within the U.S. equity market.

Sector allocations also remain nearly identical, with information technology representing roughly 35% of the portfolio, followed by financials, communication services, consumer discretionary, and industrials.

The Biggest Difference: Cost

The most important distinction between the two ETFs is cost.

VOO charges an annual expense ratio of just 0.03%, making it one of the least expensive investment products available.

SPY charges 0.0945%, which remains relatively low by industry standards but is more than three times higher than Vanguard’s fee.

While the difference may appear small, lower costs compound over time and can have a meaningful impact on long-term investment returns, especially for investors holding assets over decades.

This fee advantage has helped VOO generate slightly better cumulative returns despite tracking the same index.

Why Traders Often Prefer SPY

Although VOO may be the superior choice for many long-term investors, SPY continues to maintain advantages for professional traders and institutions.

SPY remains one of the most actively traded securities in the world, regularly recording daily trading volumes that significantly exceed VOO.

The higher liquidity allows traders to enter and exit positions more efficiently while benefiting from tighter bid-ask spreads.

SPY also offers one of the most active options markets available, making it a preferred vehicle for hedging, speculation, and complex trading strategies.

For these reasons, many institutional investors and active traders continue to favor SPY despite its higher expense ratio.

Long-Term Investors Benefit From Simplicity

For retirement savers and long-term investors, however, trading volume and options activity are often less important.

Most investors simply want diversified exposure to the U.S. stock market at the lowest possible cost.

VOO’s combination of broad market exposure, minimal fees, and straightforward structure has made it a preferred choice for investors seeking long-term wealth accumulation.

Its growth to more than $1 trillion in assets reflects widespread confidence in this approach.

Outlook

Both VOO and SPY remain excellent vehicles for gaining exposure to the S&P 500 and participating in the long-term growth of the U.S. economy.

However, for investors focused on long-term investing rather than active trading, VOO’s lower expense ratio provides a meaningful advantage that can compound over time.

While SPY continues to dominate among traders and institutions due to its unmatched liquidity, VOO appears better positioned for investors seeking a simple, low-cost way to build wealth through broad market ownership.