Best S&P 500 ETFs in 2026: Low Fees & Top Picks Compared
Adheres to
Adheres to Picking the right S&P 500 ETF comes down to one thing: fees. Even a 0.06% difference compounds into thousands of dollars over a 30-year investing hori...
- Side-by-side comparison of 4 top S&P 500 ETFs with fees as low as 0.02%
- Updated AUM, expense ratios, and performance data for 2026
- Find which fund saves you the most over decades of investing
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What Is An S&P 500 ETF?
An S&P 500 ETF is an investment fund that tracks the 500 largest U.S. companies. Think of it as buying a tiny piece of Apple, Microsoft, Amazon, and 497 other top companies with one simple purchase.
The S&P 500 represents about 80% of the total U.S. stock market value, with an aggregate market cap exceeding $61 trillion as of late 2025. These funds give you instant access to America's biggest winners without having to pick individual stocks by yourself.
Choosing the right S&P 500 ETF can save you thousands in fees over decades of investing. This guide compares the best S&P 500 ETFs available on the market in 2026, including the newest low-cost contender.
Key Facts About S&P 500 ETFs
The S&P 500 returned 16.4% in 2025 and has averaged roughly 10% annual returns over the past century
Four main ETFs dominate the space: VOO, IVV, SPY, and SPYM with over $2.4 trillion combined
Expense ratios range from 0.02% (SPYM) to 0.0945% (SPY), and small differences cost thousands long-term
ETFs are more tax-efficient than mutual funds due to their unique in-kind redemption structure
You can start investing with $1-5 through fractional shares at most brokers
The index includes roughly 500 companies worth over $61 trillion combined
Dividends are paid quarterly and can be automatically reinvested for compound growth
No minimum investment required unlike many mutual funds that demand $1,000-$3,000
Top 4 S&P 500 ETFs: Our Recommendations
Four ETFs dominate the S&P 500 space: VOO, IVV, SPY, and SPYM. While they all track the same 500 companies, they differ in costs, structure, and features that matter for your wallet. Warren Buffett himself has repeatedly recommended low-cost S&P 500 index funds over actively managed alternatives. All the key details are in the comparison table below:
| ETF | Expense Ratio | Assets Under Management | Launch Year | Why It's Great | Best For |
|---|---|---|---|---|---|
| Vanguard S&P 500 ETF (VOO) | 0.03% | $873 billion | 2010 | Rock-bottom fees with Vanguard's shareholder-owned structure keeping costs low. Now the largest ETF in the world by AUM. | Buy-and-hold investors who want maximum money working for them |
| iShares Core S&P 500 ETF (IVV) | 0.03% | $754 billion | 2000 | Matches VOO's ultra-low fees with BlackRock's institutional backing. Oldest of the low-cost options with tight tracking. | Investors who want low costs with BlackRock's reputation and stability |
| SPDR S&P 500 ETF (SPY) | 0.0945% | $700 billion | 1993 | The original S&P 500 ETF with the highest trading volume and tightest spreads. Higher fees hurt long-term returns. | Active traders who need maximum liquidity and options market depth |
| SPDR Portfolio S&P 500 ETF (SPYM) | 0.02% | $107 billion | 2005 | The cheapest S&P 500 ETF on the market after cutting fees to 0.02% in August 2025. Formerly SPLG. | Cost-conscious long-term investors who want the absolute lowest expense ratio |
VOO vs SPY vs IVV: Which S&P 500 ETF Should You Pick?
This is the most common question investors ask, and the answer depends on what type of investor you are.
VOO vs SPY comes down to fees versus liquidity. VOO charges 0.03% while SPY charges 0.0945%. On a $100,000 investment, that's the difference between $30 and $94.50 per year. Over 30 years with compound growth, SPY's higher fee could cost you more than $10,000 in lost returns. SPY's advantage is its massive trading volume and tight bid-ask spreads, which matter for active traders making frequent large trades.
VOO vs IVV is nearly a coin flip. Both charge 0.03%, both track the S&P 500 with minimal tracking error, and both reinvest dividends efficiently. VOO is slightly larger ($873 billion vs $754 billion in AUM), but IVV has been around longer (since 2000 vs 2010). Pick whichever your broker offers at the lowest total cost.
SPYM (formerly SPLG) is the dark horse. At just 0.02%, it undercuts every competitor on fees. The fund is smaller at $107 billion, but that's still enormous by any standard. For pure buy-and-hold investors focused on minimizing costs, SPYM deserves serious consideration.
For most long-term investors, any of these four will deliver nearly identical returns. The real enemy isn't picking the "wrong" ETF. It's not investing at all.
Why Expense Ratios Matter
Expense ratios might seem like tiny numbers, but they're actually one of the most important factors when choosing your S&P 500 ETF. The difference between SPYM's 0.02% and SPY's 0.0945% on a $100,000 investment compounds to over $15,000 in lost returns over 30 years.
Want to see the full math breakdown and learn how to calculate the real cost of ETF fees on your specific situation? Read our comprehensive guide on ETF expense ratios and their long-term impact and it could save you thousands.
Tax Efficiency: A Key S&P 500 ETF Advantage
S&P 500 ETFs offer superior tax efficiency compared to traditional investment options, helping you keep more of your returns.
ETFs use a unique "in-kind redemption" process that minimizes taxable events. When large investors want to sell, they exchange ETF shares directly for the underlying stocks rather than forcing the fund to sell securities. This structure prevents unwanted capital gains distributions that could trigger tax bills.
This tax efficiency compounds over decades of investing. Every dollar you don't pay in unnecessary taxes stays invested and continues growing, potentially adding thousands to your long-term wealth.
How To Start Investing In S&P 500 ETFs
Getting started takes five simple steps, and you can begin with pocket change.
Choose Your Account Type
Taxable brokerage accounts offer maximum flexibility. Traditional IRAs give tax deductions now but you pay taxes later. Roth IRAs provide tax-free growth forever. 401(k)s often include employer matching, which is free money you can't ignore.
Pick A Broker
Schwab, Fidelity, and most major brokers offer commission-free ETF trading. Compare account minimums and features, but don't overthink it. Any of the big brokerages will work just fine.
Start Small With Fractional Shares
Most brokers let you buy fractional shares starting at $1-5. Can't afford a full VOO share at over $630? Buy $50 worth and own a fraction of a share. SPYM trades at a lower share price (around $75), making it easier to buy whole shares if you prefer.
Automate With Dollar-Cost Averaging
Invest the same amount monthly regardless of market swings. When prices drop, you buy more shares. When they rise, you buy fewer. This smooths out volatility over time.
Pick One ETF And Stick With It
Don't buy multiple S&P 500 ETFs since they're nearly identical. Choose SPYM for the lowest fees, VOO or IVV for rock-solid tracking, set up automatic monthly purchases, and let compound growth do the heavy lifting. The key is consistency, not complexity.
Frequently Asked Questions
Which S&P 500 ETF is best for beginners?
SPYM, VOO, or IVV are all excellent for beginners. SPYM has the lowest expense ratio at 0.02%, while VOO and IVV charge 0.03%. All three track the same index with nearly identical performance. Pick any one of them and start investing consistently.
Is VOO or SPY better?
VOO is better for most investors. It charges 0.03% versus SPY's 0.0945%, which saves you thousands over decades of investing. VOO also recently became the largest ETF in the world by assets under management. SPY's only advantage is its higher trading volume, which benefits active traders and options traders who need tight bid-ask spreads.
What S&P 500 ETF does Warren Buffett recommend?
Warren Buffett has repeatedly recommended low-cost S&P 500 index funds for most investors. He famously instructed the trustee of his estate to put 90% of his wife's inheritance into a low-cost S&P 500 index fund. Buffett has specifically praised Vanguard's offerings, making VOO or SPYM the closest match to his advice.
Which is better, VOO or IVV?
VOO and IVV are nearly identical. Both charge 0.03% in fees, both track the S&P 500 with minimal tracking error, and both reinvest dividends efficiently. VOO is slightly larger ($873 billion vs $754 billion in AUM) and is managed by Vanguard. IVV is managed by BlackRock and has been around longer (since 2000 vs 2010). Pick whichever your broker offers at the lowest total cost.
Can you lose money in S&P 500 ETFs?
Yes, you can lose money short-term. The S&P 500 fell 37% in 2008 and dropped nearly 19% during the first half of 2025 before recovering to finish the year up 16.4%. However, the index has never lost money over any 20-year period in history, making it reliable for long-term wealth building.
How much should you invest monthly in S&P 500 ETFs?
Start with whatever you can afford, even $25-50 monthly. The key is consistency. Many financial advisors suggest investing 10-20% of your income, but begin small and increase over time as your income grows.
Do you need multiple S&P 500 ETFs?
No, one S&P 500 ETF is enough. VOO, IVV, SPY, and SPYM all track the same 500 companies, so buying multiple creates unnecessary overlap without additional diversification benefits.
When do S&P 500 ETFs pay dividends?
Most S&P 500 ETFs pay dividends quarterly, typically in March, June, September, and December. You can choose to receive cash payments or automatically reinvest dividends to buy more shares.
What's the minimum investment for S&P 500 ETFs?
With fractional shares, you can start with $1-5 at most brokers. There's no minimum investment requirement, making S&P 500 ETFs accessible to investors with any budget. If you prefer buying whole shares, SPYM trades at around $75 per share, the lowest price among the major S&P 500 ETFs.
Should you invest during market downturns?
Yes, market downturns offer buying opportunities. Dollar-cost averaging helps by automatically buying more shares when prices drop and fewer when they rise, potentially improving long-term returns.
How do you track S&P 500 ETF performance?
Compare your ETF's returns to the S&P 500 index itself. Good ETFs stay within 0.02% of the index's performance. Your broker's app or website shows performance data and comparisons.
Bottom Line: Choose Low Costs And Stay Consistent
The math is clear: SPYM wins on pure cost with its 0.02% expense ratio, while VOO and IVV are close behind at 0.03%. SPY works for active traders but costs more over time. Choosing just one of these ETFs gives you everything you need.
The S&P 500 delivered a 16.4% return in 2025 and has averaged roughly 10% annually over the past century. That kind of long-term performance is hard to beat with stock picking. Start today with whatever amount you can afford.
Consistency and low costs matter more than perfect timing. Even $50 monthly grows into serious money over decades thanks to compound growth. The best time to start investing was 20 years ago. The second best time is now.
When you're ready, Financer can help you compare the best investment platforms for your S&P 500 ETF purchase. Compare all options for no cost, no sign-up, and 100% transparency.