![]() ![]() Some investors, however, might prefer to focus on comparatively safer large-cap equity / equity funds, and that is quite reasonable too. I think pairing SPY and VOO with some smaller investments in small-cap equities or equity funds would be ideal, for the increased diversification. Although both SPY and VOO are sufficiently diversified, broader equity market indexes are more diversified, and provide investors with exposure to an even greater, broader set of equities. VTI, for instance, invest in 3935 stocks, more than 3400 more stocks than either of these funds. companies, both funds lack exposure to thousands of mid-cap and small-cap equities. ![]() Focusing on large-cap equities reduces risks somewhat, as larger companies tend to have stronger business models, sturdier balance sheets, and more diversified revenue streams.Īs the S&P 500 only includes 500 U.S. means investing in these large companies. is home to some of the largest corporations in the planet, so investing in the U.S. SPY and VOO focus on large-cap equities, but that is partly, perhaps mostly, a reflection of U.S. equity index fund, has a weighted average market-cap of $440 billion. As a comparison, the Vanguard Total Stock Market ETF ( VTI), a broader U.S. companies, both are large-cap funds, with a weighted average market-cap of $534 billion. Further diversification into small-cap equities and international stocks would be best, but choosing to focus on the S&P 500 index is a reasonable choice too.Īs the S&P 500 only includes the 500 largest U.S. Both funds could function as a core, even only, portfolio holding. SPY and VOO's diversified holdings reduce portfolio risk and volatility, and are a significant benefit for the funds and their shareholders. ![]() The small differences in weights are almost exclusively due to the fact that Vanguard does monthly publishing of its holdings, so the fund's weights tend to be a bit outdated. Holding weights are also effectively identical between the funds. Neither fund is excessively concentrated, with the top ten holdings of each fund comprising about 28% of their total value. Industry weights are effectively identical between the funds. Both funds are overweight tech, due to the large market-capitalizations of the larger tech companies, including Apple ( AAPL), Microsoft ( MSFT), and Google ( GOOG). The number of holdings itself, 500, is quite large, and these are reasonably diversified across all relevant industry segments. SPY and VOO both provide investors with well-diversified holdings, product of its index. It is a market-capitalization weighted index. equities, subject to a basic set of liquidity, size, etc., eligibility criteria. Said index includes the 500 largest public U.S. SPY and VOO are both S&P 500 index funds. SPY and VOO - Similarities Strategy and Holdings Still, these are extremely similar funds, with more similarities than differences. In my opinion, VOO's lower expense ratio and superior corporate structure make it the stronger fund. VOO's parent company is also more shareholder-friendly, as Vanguard operates as a mutual company, and returns any and all profits to shareholders in the form of lower expenses. On the other hand, VOO is slightly cheaper, with an expense ratio of 0.03%, versus 0.09% for SPY. As both funds track the same index, both have effectively identical strategies, holdings, and performance. The SPDR S&P 500 Trust ETF ( NYSEARCA: SPY) and the Vanguard S&P 500 ETF ( NYSEARCA: VOO) are two of the largest S&P 500 index funds available in the market. ![]()
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