Own Vanguard S&P 500 ETF to hold the S&P 500. Use State Street SPDR S&P 500 ETF Trust for options and large blocks.
Through September 30, 2026, Vanguard's fund lagged the S&P 500 by about its fee and led State Street's trust by 0.10 to 0.12 percentage points a year, more than the fee gap.
Key takeaways
Over the year through September 30, 2026, the Vanguard S&P 500 ETF, VOO, lagged the S&P 500 by about its fee. The State Street SPDR S&P 500 ETF Trust, SPY, lagged by more than its fee.
The shortfall against the index
Both funds are built to track the S&P 500. Vanguard's April 28, 2026 prospectus says VOO invests in all, or substantially all, of the index stocks, each at about its index weight, and charges 0.03%. State Street's fact sheet as of June 30, 2026 puts SPY's fee at 0.0945%.
Vanguard and State Street each reported 15.74% for the S&P 500 for the year through September 30, with dividends reinvested. Each fund's return below is measured the same way, on the value of the stocks it owns, not on the share price.
Vanguard's shortfall is about its fee. State Street's is larger than its fee.
Vanguard led by 0.10 percentage points over that year. Annualized over three, five and ten years, the lead was 0.10 to 0.12 percentage points a year, wider than the difference in fees.
On every $100,000, a gap of that size is $100 to $120 a year. Vanguard's shortfall against the index was the same on those longer windows. SPY trailed the index by more than its fee on each of them.
What the trust cannot do
SPY is a unit investment trust. Brendan McCann of Morningstar wrote on March 12, 2026 that this was the approved structure for the earliest exchange-traded funds, and that most ETFs are no longer built that way.
The trust cannot lend securities, he wrote. It cannot use derivatives to keep spare cash invested in the index, and it must hold dividends in an account that pays no interest until the next quarterly payout. He called that a small but persistent cash drag.
The options market
State Street wrote on August 28, 2026 that SPY averaged $50.3 billion a day in the first half of 2026, about 79% of all trading in S&P 500 ETFs. As of June 30, 2026, the firm said, the trust held 99.2% of the options open interest in those funds.
Which fund to own
Buy VOO with money you plan to leave alone. If a sale would not create a tax bill, move an existing holding into it as well.
Use SPY if you trade options on the index, or if you need to buy or sell a large position in a day.
If you already hold SPY and a sale would tax the gain, keep the shares. Put the next dollar in VOO.
ETFs in this story
Frequently asked questions
How far did VOO trail the S&P 500?
Over the year through September 30, 2026, VOO returned 15.70% against the index's 15.74%, a shortfall of 0.04 percentage points, about its 0.03% fee.
Why did SPY trail by more than its fee?
SPY is a unit investment trust, so it cannot lend securities, cannot use derivatives to keep spare cash invested in the index, and must hold dividends in an account that pays no interest until the next quarterly payout.
How wide was VOO's lead over SPY?
VOO led by 0.10 percentage points over that year, and by 0.10 to 0.12 percentage points a year over three, five and ten years, wider than the difference in fees.
How much of S&P 500 ETF trading and options is still in SPY?
State Street said SPY averaged $50.3 billion a day in the first half of 2026, about 79% of all trading in S&P 500 ETFs, and held 99.2% of the options open interest in those funds as of June 30, 2026.
