Investing
Farran Powell
Farran Powell
Verified by an expert
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 9:02 a.m. UTC April 2, 2024
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Due to their versatility and simplicity, you can use S&P 500 exchange-traded funds as core portfolio building blocks.
Our selection of the best S&P 500 ETFs of 2024 have a 10-year annualized tracking error of 0.28% or less, a net expense ratio of 0.2% or less, at least $1 billion in assets under management, and a minimum 10-year track record of performance.
Why trust our investing experts
Experienced fund analysts select our best fund selections based on screening several must-have metrics. These metrics include but are not limited to assets under management, expense ratio, strategy, management, minimum investment requirements, turnover and fees. You can read more about our methodology below.
- 3,000+ ETFs screened.
- 3 levels of fact-checking.
- 3-step editorial review.
Best S&P 500 ETFs
- .
- 500 ETF (IVV).
- .
- .
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SPDR S&P 500 ETF Trust (SPY)
Why it made our list
The SPDR S&P 500 ETF Trust reigns supreme as the most popular S&P 500 ETF. The first ETF launched in the U.S. has maintained this status thanks to its strong institutional backing and first-mover advantage. SPY doesn’t have the lowest expense ratio on our list. But it makes up for this in liquidity.
This ETF has one of the highest trading volumes on the market. So it’s easy to fill even large orders quickly. Due to its liquidity, SPY remains a favorite among traders.
Pros and cons
Pros
- Extremely easy to buy and sell.
- Good options chain.
- High daily volume.
Cons
- Higher expense ratio than some competitors.
- Higher 10-year tracking error than lower-cost competitors.
- Lack of international equity exposure.
More details
- Expense ratio: 0.095%.
- Total assets: $530.9 billion.
- 30-day SEC yield: 1.23%.
- 10-year annualized return: 12.85%.
Vanguard S&P 500 ETF (VOO)
Why it made our list
Vanguard is best known for its low-cost . You can access it in ETF form as the Vanguard S&P 500 ETF. VOO is traded on an exchange. Its price is updated throughout the day instead of at the end of the day.
VOO’s minimum required investment is lower than its index mutual fund counterpart’s at the price of a single share. And it’s a third as expensive as the SPDR S&P 500 ETF Trust. This makes it an economical option for S&P 500 exposure. VOO also comes with the backing of a reputable and long-standing fund manager.
Pros and cons
Pros
- Low expense ratio.
- Low portfolio turnover rate.
- Low tracking error relative to the index.
Cons
- Less well-developed options chain.
- High concentration in technology sector stocks.
- Lack of international equity exposure.
More details
- Expense ratio: 0.03%.
- Total assets: $435 billion.
- 30-day SEC yield: 1.33%.
- 10-year annualized return: 12.91%.
SPDR Portfolio S&P 500 ETF (SPLG)
Why it made our list
Consider the SPDR Portfolio S&P 500 ETF if you want to stick to a name brand but are looking for a lower-cost alternative to the SPDR S&P 500 ETF Trust. SPLG doesn’t offer the same trading volume and options chain. But you will get a lower expense ratio and a lower price per share.
You might prefer this ETF if you seek a long-term buy and hold and are not actively trading or using options.
Pros and cons
Pros
- Very low expense ratio.
- Low portfolio turnover rate.
- Lower 10-year tracking error than the SPDR S&P 500 ETF Trust.
Cons
- It’s slightly less liquid than the SPDR S&P 500 ETF Trust.
- High concentration in technology sector stocks.
- No small-cap equity exposure.
More details
- Expense ratio: 0.02%.
- Total assets: $33.5 billion.
- 30-day SEC yield: 1.32%.
- 10-year annualized return: 12.83%.
Invesco S&P 500 Equal Weight ETF (RSP)
Why it made our list
A common complaint regarding S&P 500 ETFs is the heavy concentration in technology sector stocks and the top 10 holdings. To remedy this, opt for the Invesco S&P 500 Equal Weight ETF.
The 500 stocks in RSP are weighted equally. This ensures a more diverse representation of companies and sectors. Technology represents a smaller portion of the portfolio as a result. So RSP’s performance fluctuates from the S&P 500 index’s return, for better or worse, depending on the period.
The turnover rate on this ETF is fairly high due to the quarterly rebalancing. This can result in greater taxes and lower efficiency.
Pros and cons
Pros
- More evenly balanced between sectors.
- The top 10 holdings do not dominate the ETF.
- Greater exposure to mid-cap stocks.
Cons
- Higher expense ratio than other ETFs.
- Equal weighting methodology results in a higher portfolio turnover rate.
- Prone to underperform the benchmark index and incur a higher tracking error.
More details
- Expense ratio: 0.2%.
- Total assets: $53.2 billion.
- 30-day SEC yield: 1.66%.
- 10-year annualized return: 10.64%.
Compare the best S&P 500 ETFs
| FUND | TICKER | EXPENSE RATIO | TOTAL ASSETS | 30-DAY SEC YIELD |
|---|---|---|---|---|
SPDR S&P 500 ETF Trust | SPY | 0.095% | $530.9 billion | 1.23% |
iShares Core S&P 500 ETF | IVV | 0.03% | $457.1 billion | 1.36% |
Vanguard S&P 500 ETF | VOO | 0.03% | $435 billion | 1.33% |
SPDR Portfolio S&P 500 ETF | SPLG | 0.02% | $33.5 billion | 1.32% |
Invesco S&P 500 Equal Weight ETF | RSP | 0.2% | $53.2 billion | 1.66% |
Methodology
We created our ranking of the best S&P 500 ETFs by applying a screen of several must-have metrics:
- Tracking error. We assessed how much an ETF’s 10-year annualized performance differed from the S&P 500 index’s 10-year annualized return of 11.8% as of Dec. 31, 2023.
- AUM. All the ETFs on this list have accrued at least $1 billion in assets under management. ETFs with a higher AUM tend to have higher trading volume, tighter bid-ask spreads and more popularity.
- Expense ratio. We capped the acceptable expense ratio at 0.2%. The expense ratio is deducted directly from the gross returns of the ETF. Keeping it as low as possible can help an S&P 500 ETF track its benchmark index more closely.
- Management style. All the ETFs on this list replicate the exact holdings of the S&P 500 index and its returns in a passively managed structure. Actively managed ETFs that use the S&P 500 index as an underlying asset were excluded.
This set of criteria allows you to screen for S&P 500 ETFs that are passively managed, have a low cost, incur minimal tracking error and have an established market presence backed by a competent fund manager.
An experienced fund analyst selected the funds above, but they may not be right for your portfolio. Before purchasing any of these funds, do plenty of research to ensure they align with your financial goals and risk tolerance.
Why other S&P 500 ETFs didn’t make the cut
We focused on passively managed S&P 500 ETFs for our ranking. Passively managed S&P 500 ETFs replicate the benchmark index holdings and track its returns as closely as possible.
We excluded actively managed ETFs and factor-based ETFs. These include ETFs that target leveraged, inverse or enhanced income exposure for the . These also include ETFs that attempt to isolate a particular style of stock, such as value, growth, low volatility or dividend aristocrat, from the S&P 500.
We made this decision after reviewing the latest SPIVA Scorecard from the S&P Dow Jones Indices. The SPIVA scorecard measures the performance of actively managed funds worldwide against their index benchmarks. Roughly 88% of U.S. large-cap funds underperformed the S&P 500 over the last 15 years, as of Dec. 31, 2023.
Actively managed and factor S&P 500 ETFs might have uses if you want to try to outperform the market and generate higher yields or hedge against crashes. But passively managed S&P 500 ETFs provide the best blend of low fees, high diversification, simplicity and transparency. You can capture as much of the S&P 500 index’s returns as possible net of fee with these ETFs.
Final verdict
“ETFs tracking the S&P 500 index can appeal to investors who want broadly diversified exposure to large-cap U.S. stocks with very low costs and high liquidity,” said Michelle Louie, senior portfolio manager at Vanguard’s Equity Index Group.
Our recommendation for the best S&P 500 ETF is the iShares Core S&P 500 ETF due to its ultralow fees, minimal tracking error, strong trading volume and robust assets under management. IVV offers the best value proposition if you’re a long-term buy-and-hold investor who isn’t looking to trade daily or utilize options.
About the S&P 500
The S&P 500 index, established in 1957, is one of the leading benchmarks for U.S. equity performance. It tracks 500 companies, which are weighted by market capitalization. The larger the company, the more significant its weight in the index. The S&P 500 covers about 80% of the domestic U.S. equity market and offers a broad representation of its performance.
A committee chooses the companies for the index. It reviews their size, liquidity and profitability. This process ensures the S&P 500 reflects the performance of the stock market.
How to pick the best S&P 500 ETF
Focus on fees to choose the best S&P 500 ETF. All passive S&P 500 ETFs track the same underlying index. So differences in performance largely can be attributed to varying expense ratios.
You can pick S&P 500 ETFs with higher returns net of fees and lower tracking errors relative to the underlying index by keeping expense ratios low. If fees are equal, consider the ETF provider’s reputation, portfolio turnover rate, AUM and bid-ask spread.
Pros and cons of investing in S&P 500 ETFs
Investing in an S&P 500 ETF has advantages and disadvantages.
Pros
- Ability to capture the returns of a long-standing benchmark index.
- High liquidity means it is easy to buy and sell shares.
- Historically strong returns over long periods of efficiency.
Cons
- Lack of small-cap stocks.
- Lack of international diversification.
- Historically high volatility during bear markets and crashes.
Considering your objectives, risk tolerance and time horizon are key when deciding whether an S&P 500 ETF is right for you.
Ways to invest in the S&P 500
You can invest in the S&P 500 in two main ways:
- Through individual stocks that are included in the S&P 500.
- Through S&P 500 funds.
Experts generally agree the best way to invest in the S&P 500 is through an exchange-traded fund or index fund. While there are differences between these approaches, both offer low costs and diversification.
Frequently asked questions (FAQs)
The S&P 500 is a popular investment due to several factors.
The first is its longevity. The index launched in March 1957 and has since been a barometer of U.S. market performance.
The S&P 500 is also popular due to its high historical returns. On average, the S&P 500 has returned an annualized 10% with dividends reinvested.
Finally, the S&P 500 has been endorsed by many investing icons, including Warren Buffett, who disclosed it as an intended holding for his estate upon his passing.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
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Tony Dong is a freelance financial writer with bylines in U.S. News and World Report, the NYSE, the Nasdaq, The Motley Fool and Benzinga. He lives in Vancouver, Canada and is an avid watch collector.
BLUEPRINT
Farran Powell is the lead editor of investing at USA TODAY Blueprint. She was previously the assistant managing editor of investing at U.S. News and World Report. Her work has appeared in numerous publications including TheStreet, Mansion Global, CNN, CNN Money, DNAInfo, Yahoo! Finance, MSN Money and the New York Daily News. She holds a BSc from the London School of Economics and an MA from the University of Texas at Austin. You can follow her on Twitter at @farranpowell.
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