S&P 500 ETF Can Build $1 Million Portfolios With 11% Annualized Returns

Q: If VOO, IVV, and SPY all track the same index, which one actually gives long-term investors the best edge?

For a long-term buy-and-hold investor, VOO or IVV generally offers the best edge, while SPY is usually the weaker choice. The reason is simple: all three funds track the same S&P 500 index and hold nearly identical portfolios, so the main differentiator is cost. VOO and IVV each charge about 0.03% annually, while SPY charges roughly 0.09% to 0.0945%. That gap looks small, but over decades it compounds into meaningful savings and slightly better net returns. Recent comparison data backs that up. Five-year annualized returns are effectively tied, with VOO at about 12.76%, IVV at 12.75%, and SPY at 12.68%. Over time, the cheaper funds tend to keep a small but real advantage because less of the return is lost to fees. Between VOO and IVV, the difference is marginal. VOO has the larger asset base, around $1.6 trillion to $1.7 trillion, which gives it immense scale and strong liquidity. IVV is also enormous and has a slightly longer history and, in some snapshots, a marginally higher dividend yield. For most individual investors, those differences are too small to materially change outcomes. SPY still has a role, but mainly for traders. It has unmatched trading volume and a deep options market, which makes it attractive for short-term activity. For long-term investors, though, paying a higher fee for essentially the same index exposure is hard to justify. If the goal is long-term wealth building, VOO and IVV are the better edge, with VOO often the simplest default pick.

3 articles · Updated · Yahoo Finance · Aug 9

$1.7 trillion Vanguard S&P 500 ETF is highlighted as a simple, low-risk route to long-term millionaire status by tracking the broad U.S. stock market.
Since 1990, the S&P 500 has delivered nearly 11% annualized returns, with long-term compounding overcoming periodic market crashes and downturns.
The index holds 500 U.S. stocks and favors larger, profitable companies, with a $20.5 billion minimum market cap and quarterly rebalancing.
That structure gives investors instant diversification and market-matching performance without stock picking, while VOO charges a 0.03% expense ratio.