IVV vs. SPY: IVV is cheaper to hold; SPY wins for options and quick trades

Buy the iShares Core S&P 500 ETF (IVV) if you plan to hold. It owns the same stocks as the State Street SPDR S&P 500 ETF Trust (SPY) for less than a third of the fee, 0.03% a year against 0.0945%, and it kept more of the index’s return over the trailing one, three, five and 10 years through Sept. 30.

However, SPY you might consider SPY if you want to trade its options, or you expect to sell within weeks.

Why SPY may be better for short holding periods

State Street’s own figures show how short that window is: In August, the company estimated what it would cost to buy $25 million of each fund, spread out over half an hour at midday, using market data as of June 30. The answer was about $375 for SPY and $700 for IVV, a difference of $325. Buying and later selling doubles that to about $650. But on $25 million, IVV’s lower annual fee saves about $16,000 a year, or roughly $44 a day. That covers the $650 in about 15 days. Hold IVV any longer than that, and it comes out ahead.

VV vs. SPY fees: 0.03% vs. 0.0945%

Both funds track the S&P 500, large U.S. companies weighted by the value of shares the public can trade. A comparison of the latest holdings finds that 99% of the weight is the same in both funds.

IVV charges 0.03% a year. Its July 31, 2026 summary prospectus lists a 0.03% management fee, 0.00% in other expenses and a 0.03% total.

SPY charges 0.0945%. Its Jan. 26, 2026 prospectus shows where that goes: 0.0492% to the trustee, 0.0301% to S&P for the index license, 0.0132% for marketing, and 0.002% for other costs. The license fee alone roughly equals IVV’s entire 0.03% fee. The trustee keeps SPY’s total at 0.0945% through a voluntary fee waiver that runs until Feb. 1, 2027.

On $10,000, that is $3 a year against $9.45.

State Street, which issues SPY, estimated in an Aug. 28 article, using figures as of June 30, that trading $25 million over 30 minutes would cost 0.15 basis points in SPY and 0.28 in IVV.

The difference in that estimate is 0.13 basis points, paid once. The fee gap is 6.45 basis points, paid every year.

IVV vs. SPY returns over 1, 3, 5 and 10 years

Through Sept. 30, with dividends included, iShares reported a 15.71% return for IVV over the past year. State Street reported 15.60% for SPY. Both put the S&P 500 at 15.74% for that year, so IVV trailed the index by 0.03 percentage points and SPY by 0.14.

The difference between the funds is 0.11 percentage points, or $11 on $10,000.

The lead holds over longer stretches. Annualized through that date, iShares put IVV at 22.85% over three years and State Street put SPY at 22.73%. Over five years, iShares put IVV at 13.76% and State Street put SPY at 13.65%.

Over 10 years, iShares put IVV at 15.30% and State Street put SPY at 15.18%, a lead of 0.12 percentage points a year. At those rates, $10,000 ends about $430 higher in IVV.

On iShares' page the 10-year index return is 15.32%, so IVV trailed it by 0.02 percentage points a year, less than its 0.03% fee. On State Street's page the index return is 15.33%, so SPY trailed by 0.15 percentage points a year, more than its fee. Those pages print the index a hundredth of a percentage point apart, so the two shortfalls are not a second measure of the gap between the funds.

IVV's prospectus allows the fund to lend stocks. In a 2026 brochure, iShares says its U.S. equity funds keep 81% of the income from that lending, and that the extra revenue can reduce the cost of owning the fund. IVV is one of those funds.

SPY is a unit investment trust, an older fund structure whose rules are fixed. Its prospectus says the trust may not lend the stocks it holds and may not use derivatives. Dividends the trust receives go into an account that pays no interest until the quarterly payout.

Options, not an ordinary trade

Over the 20 sessions through Nov. 6, the dollar value of shares traded on the exchange averaged $34.6 billion a day in SPY and $3.9 billion in IVV.

For a normal trade, the gap between the buying price and the selling price is already tiny. iShares puts IVV's 30-day median gap at 0.01% as of Nov. 6. State Street lists the same measure at 0.00% for SPY.

In its Aug. 28 article, State Street says SPY accounted for 99.2% of the S&P 500 ETF option contracts still outstanding as of June 30, in a count that included IVV. Nearly all of them were in SPY.

If you are not trading options, and you are not trying to get an order of many millions of dollars done, IVV is the fund that has kept more of the same return, at the lower fee.

Other S&P 500 ETF alternatives

IVV is not the only cheap way to hold the index. The Vanguard S&P 500 ETF (VOO) charges the same 0.03% and is the largest ETF of the three, with about $1.03 trillion in assets as of Sept. 30. State Street’s own SPDR Portfolio S&P 500 ETF (SPYM) charges 0.02%, and State Street pitches that fund rather than SPY, to long-term holders.