VOO vs. IVV: A Comparative Analysis

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The Vanguard S&P 500 ETF (VOO) and the iShares Core S&P 500 ETF (IVV) represent two of the most frequently utilized instruments for gaining exposure to the large-capitalization U.S. equity market. Both funds exhibit remarkably similar characteristics, prompting a detailed examination of their nuanced differences to ascertain which may be better positioned to serve specific investor objectives.

Cost and Scale

The expense ratios for both VOO and IVV are identical, currently settled at 0.03%. This parity effectively removes cost as a primary differentiating factor. However, a divergence exists in assets under management (AUM), with VOO managing approximately $1.5 trillion compared to IVV’s $760.6 billion. While both figures denote substantial liquidity, the larger AUM of VOO could potentially translate to marginally tighter bid-ask spreads, although the practical implications for most investors are likely minimal.

The following table summarizes key metrics:

Metric VOO IVV
Issuer Vanguard iShares
Expense Ratio 0.03% 0.03%
1-Year Return (as of January 23, 2026) 13.0% 13.0%
Dividend Yield 1.1% 1.2%
Beta 1.00 1.00
AUM $1.5 trillion $760.6 billion

Beta, as a measure of systematic risk, is calculated from five-year weekly returns. The one-year return represents total return over the trailing twelve months.

Performance and Risk Profile

Historical performance, over both short- and long-term horizons, demonstrates a negligible divergence between the two ETFs. Maximum drawdown figures over the past five years are virtually identical, suggesting a comparable risk profile. A $1,000 investment in either fund would have yielded approximately $1,794 over the same period. This congruence is unsurprising, given their shared objective of replicating the performance of the S&P 500 index.

Portfolio Composition

Both VOO and IVV maintain portfolios comprising approximately 500 constituents, mirroring the composition of the S&P 500. However, subtle variations exist in sector allocations. IVV exhibits a slightly higher weighting towards the technology sector (43%) compared to VOO (35%). This is reflected in the top holdings, which include Nvidia, Apple, and Microsoft in both funds, although the relative weighting of these positions differs marginally. The fund’s strategic allocation should be considered in relation to the investor’s overall portfolio diversification and risk tolerance.

Implications for Investors

For investors seeking broad-based exposure to the U.S. large-cap equity market, both VOO and IVV represent viable options. The choice between the two ultimately rests on secondary considerations. IVV’s slightly higher dividend yield may appeal to income-focused investors, while VOO’s larger AUM could provide a marginal benefit in terms of liquidity. The difference, however, is unlikely to be material for the vast majority of investors.

The increased allocation to the technology sector within IVV warrants consideration, particularly in light of the current market environment. While technology has demonstrated robust growth, it is also subject to heightened volatility and regulatory scrutiny. Investors should assess whether this sector weighting aligns with their long-term investment strategy and risk appetite.

In conclusion, both IVV and VOO are demonstrably proficient ETFs for accessing the S&P 500. The selection between the two frequently hinges on issuer preference and nuanced portfolio considerations. The primary determinant of success remains a disciplined, long-term investment approach, rather than the specific ETF chosen.

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2026-01-24 17:23