SPY is a 1993 trust, and it still costs more to hold the S&P 500

State Street SPDR S&P 500 ETF Trust, SPY, listed on Jan. 22, 1993. State Street's factsheet calls it the very first exchange-traded fund listed in the United States. The prospectus dated Jan. 26, 2026, identifies it as a unit investment trust. SPY charges 0.0945% a year.

That is $9.45 on $10,000. Vanguard S&P 500 ETF, VOO, and iShares Core S&P 500 ETF, IVV, each charge 0.03%, or $3. State Street SPDR Portfolio S&P 500 ETF, SPYM, charges 0.02%, or $2.

The prospectus estimates the trustee's fee, paid to State Street Global Advisors Trust Company, at 0.0492%, and the S&P license at 0.0301%. The license alone matches the 0.03% VOO charges for the whole fund.

The rules that come with the trust

A unit investment trust is not run by a manager. The prospectus says this one is not actively managed and only holds the common stocks in the S&P 500, with each weight "substantially corresponding" to the index. It says the trust is therefore not authorized to lend the stocks it holds, or to invest in derivative instruments, including futures contracts, options or swaps.

The trust cannot collect the income from lending those stocks. Vanguard says its funds lend securities to generate incremental revenue that can enhance returns for shareholders. iShares' prospectus for IVV, dated July 31, 2026, says that fund may lend up to one-third of its assets.

Dividends on the stocks do not stay invested.

"Dividends payable to the Trust in respect of Portfolio Securities are credited by the Trustee to a non-interest-bearing account."

The prospectus says that money is held without interest until holders are paid quarterly, net of fees. Vanguard's factsheet says VOO "remains fully invested." That is the contrast with dividends that sit in cash.

iShares says exchange-traded index futures may be used to offset cash and receivables for the purpose of tracking the index. The trust is not authorized to use them.

The shortfall beyond the fee

The prospectus says the trust seeks results that, "before expenses, correspond generally to the price and yield performance of the S&P 500 Index."

Over the year through Sept. 30, 2026, the index returned 15.74%. State Street reported a return of 15.60% on net asset value, the fund's value per share, for SPY. That is a shortfall of 0.14 percentage points, or $14 on $10,000. The fee accounts for $9.45. The other $4.55 is the gap the fee does not explain.

Vanguard reported 15.70% on net asset value for VOO over that year, a shortfall of $4 on the same $10,000, $1 more than its $3 fee. iShares reported 15.71% for IVV on the same basis, a shortfall of $3, the same as its fee. State Street reported 15.70% for SPYM on the same basis, a shortfall of $4, $2 more than its $2 fee.

The extra shortfall is the price of the rules the cheaper funds do not share: dividends sitting in cash, and no income from lending the stocks. In a year the index rose 15.74%, cash waiting to be paid out missed the rise.

State Street's figures through the same date show an annualized shortfall of 0.13 percentage points since the Jan. 22, 1993 launch, wider than the 0.0945% fee.

The shares trade far more than the cheaper funds

Over the 20 sessions through Oct. 28, 2026, SPY traded an average of $29.4 billion of shares a day. VOO averaged $3.9 billion, IVV $3.7 billion and SPYM $1.2 billion.

On Oct. 28, 2026, State Street reported $814.7 billion in SPY. iShares reported $889 billion in IVV the same day. Vanguard reported $1.03 trillion in VOO on Sept. 30, 2026, a month earlier. SPY is not the largest of these funds. It is still the one that trades.