The general consensus on Reddit from many investing subreddits is to “just buy VOO” set it and forget it. I have long been troubled by that mindset but I’m a different kind of investor. To be fair though, I decided to ask AI and create this new ETF Fight Club.
I asked AI to create a comprehensive review of SPY vs VOO. Below is the response:
SPY vs VOO (both are “S&P 500 core” — differences are mostly structure + liquidity + derivatives ecosystem)
Quick side-by-side (key facts)
| Category | SPY | VOO | What it means |
|---|---|---|---|
| Index tracked | S&P 500 | S&P 500 | Holdings and market exposure are nearly identical (large-cap U.S.). |
| Inception | 01/22/1993 | 09/07/2010 | SPY has a longer live history (dot-com + GFC + COVID). |
| Fund size (“market cap” for an ETF = AUM / total assets) | $705.1B AUM | $1,474.5B total assets | VOO is currently larger by this source set; both are enormous and scalable. |
| Shares outstanding | 1,023.03M | 1,357.6M | Affects trading microstructure more than “investment quality.” |
| Expense ratio | 0.0945% (gross/net) | 0.03% (gross/net) | For long-term holding, VOO’s fee advantage compounds. |
| Median bid/ask spread | 30-day median spread shown as 0.00% | (Varies by venue; generally tight, but SPY is the liquidity king) | For most investors, both are fine; for very large/intraday trading, SPY usually wins. |
| Equity trading volume (recent day shown) | 13,529,770 shares (prior business day on SSGA page) | 1-month avg volume 8.36M shares | SPY typically trades more, which matters for intraday execution. |
Options volume (this is where SPY absolutely dominates)
- SPY options: ~9,445,874 contracts vs avg daily ~8,859,xxx (same source snapshot)
- VOO options: ~5,239 contracts vs avg daily ~5,204
Implication: if you care about tight options spreads, deep strikes/expiries, or institutional-grade liquidity, SPY is the standard trading vehicle. VOO options exist, but they’re comparatively niche.
Market capitalization exposure (what you actually own)
Because both track the S&P 500, they’re both dominated by giant/large-cap stocks. For example, Schwab’s VOO report shows market-cap buckets heavily weighted to giant + large cap (with small cap under 1%).
SPY’s fact sheet also reports an average market cap around $1.43T for constituents.
Bottom line: differences in “market cap exposure” are negligible; you’re buying the same ecosystem of mega-cap U.S. equities either way.
Historical growth (returns)
SPY (as of 12/31/2025, total return annualized)
- 1Y 17.73%
- 3Y 22.84%
- 5Y 14.28%
- 10Y 14.66%
VOO (as of 12/31/2025, Schwab report)
- 1Y 17.8%
- 5Y 14.4%
- 10Y 14.8%
- Since inception 14.7–14.8% (market vs NAV)
Interpretation: performance is extremely close (same index). Over long horizons, fees + tiny tracking differences are the main systematic gap—VOO tends to be slightly advantaged for buy-and-hold due to lower expense ratio.
Resiliency (drawdowns, recovery behavior, and structure)
1) Market crash behavior (they fall like the S&P 500)
- During the Great Recession, the S&P 500 fell ~57% from Oct 2007 peak to Mar 2009 trough.
- A drawdown analysis source pegs SPY’s max drawdown ~55.19% (Mar 9, 2009).
- For the COVID shock, one dataset shows VOO max drawdown ~33.99% (Mar 23, 2020).
Key point: resiliency (in the sense of “how much it can drop in an equity crisis”) is basically index-driven, not fund-driven.
2) Structural resiliency (tracking + “cash drag” mechanics)
A real, persistent difference:
- SPY is a Unit Investment Trust (UIT); UIT mechanics typically don’t reinvest dividends immediately (dividends sit as cash until distribution).
Implication: in strong uptrends, SPY can experience a small performance drag versus an open-end structure that can keep cash lower. In down markets, that same cash drag can slightly cushion (usually tiny either way).
So which is “better”?
Choose VOO if you’re primarily a long-term holder
- Lower ongoing cost (0.03% vs ~0.0945%).
- Massive scale (total assets shown at $1.47T in Schwab report).
Choose SPY if you care about trading + options
- SPY is built for liquidity: extremely active share trading and an enormous options market (orders of magnitude bigger than VOO’s).
- If you hedge, write calls/puts, trade spreads, or need reliable fills at many strikes/expiries, SPY is usually the default.
My Thoughts
I will always choose SPY over VOO specifically because of the options liquidity. If you trade options you understand that higher liquidity means tighter (and better) spreads. I use options for a variety of things including hedging, extra income (covered calls, put spreads), and discount purchases (base ratio spreads). While VOO has options and these things might be possible, the spreads aren’t as good.
Share The Wealth
VOO or SPY?