Navigating the S&P 500 ETF Landscape: Making an Informed Choice | Moomoo Research

When considering an indexing investment strategy, particularly for large-cap stocks in the U.S. stock market, exchange-traded funds (ETFs) that track the S&P 500 Index are often chosen by many investors.

The S&P 500 Index, created by Standard & Poor's in 1957, is a capitalization-weighted index that comprises the stocks of 500 of the largest companies listed on major U.S. exchanges. The index represents approximately 80% of the total market value of the U.S. stock market and is thus considered a key indicator of the overall health of the American economy.

As of August 8, 2024

In summary, while SPY, IVV, and VOO all track the same index—the S&P 500—there are subtle differences:

SPY is the most mature and liquid fund in the entire stock market.

Both SPY and VOO use full replication, mirroring the holdings of the index exactly; IVV uses optimal replication, replicating only a portion of the core stocks.

All three have good liquidity in the U.S. ETF market and very similar returns. Year-to-date gains for SPY, IVV, and VOO were +12.35%, +12.41%, and +12.42%, respectively.

In short, SPY perfectly aligns with the S&P 500 Index, whereas IVV selects the best from the best, providing precise tracking.