Last week I introduced resources for information and how to compare major fund types in How to Pick a Fund. This week, we’ll dig into a practical comparison of three specific exchange traded funds based on the S&P 500 Index so you can follow along with how those resources can be used.
What is the S&P 500 Index?
The S&P 500, or more formally, the Standard and Poor’s 500 Index, attempts to compile a list of 500 of the most important and successful large capitalization (large cap) companies listed on the US Stock markets. While this list only covers a small portion of the 4,000+ companies listed, this list encompasses 80% of the market capitalization.
In other words, the stock price times the number of shares listed for these 500 companies covers 80% of all dollars invested in the US stock markets! No wonder why so many funds use this list as a basis for developing index funds.
What Are Index Funds?
Index funds purchase stocks based on a specific index, or list of stocks developed by a third party (such as Standard and Poor’s). While you could also create your own index, most indexes used to create index funds require some credibility with the stock market financiers.
The S&P 500 Index benefits from the 130 year-old track record of its founders to maintain a relevant and active list of companies. Thanks to this hard-won reputation Morningstar notes that this index is the most actively benchmarked index for mutual and exchange traded funds.
QAD notes that the average company lasts for only 15 years or less before being replaced on the S&P 500 index as markets and companies fall in and out of favor. Other indexes may make more or less changes based on their strategies and principles, so be sure to also read up on your index to understand the basis of your index fund.
Sample Fund Comparison RSP, SPY, and VOO
Morningstar notes that dozens of index funds use the S&P 500 as a basis, but for our comparison example, we’ll stick with three popular S&P 500 index funds traded on the US stock exchanges:
- Invesco S&P 500 Equal Weight ETF (RSP)
- State Street SPDR S&P 500® ETF Trust (SPY) – technically a unit trust, not an exchange traded fund, but this doesn’t matter a lot for our purposes
- Vanguard S&P 500 ETF (VOO)
Each of these index funds may be purchased through any brokerage account and may even be available in some 401k or 403b plans. To make our comparison I will use the key factors listed (primarily) on their websites covered in last week’s column: costs, assets, managers, performance and taxes.
Costs: Expense Ratios
As reinforcement to the importance of fund costs, each fund puts their expense ratio front and center at the top of the web page:
- RSP = 0.20%
- SPY = 0.0945%
- VOO = 0.03%
Clearly, Vanguard’s fund enjoys the clear advantage with regards to expense ratio with SPY’s expense ratio over 300% higher than VOO and Invesco’s RSP’s expense ratio more than 600% higher than VOO. Why would anyone ever buy RSP?
Fund Assets
Let’s take a closer look at the fund’s assets for clues. Notice that each of these fund web pages places “Portfolio,” “Holdings,” or “Portfolio Composition” very clearly on the web page because they know this is important (and possibly required by law).
RSP’s fund is an equal weight fund that buys an equal number of shares of each of the 500 stocks in the S&P 500 index with each stock only 0.24-0.26% of the fund.
- RSP Top 5 sectors:
- 18.97% in Information Technology
- 15.05% in Financials
- 15.02% in Industrials
- 11.08% in Healthcare
- 8.99% in Consumer Discretionary
SPY’s fund is weighted by market capitalization (share price times available shares) so that the most valuable stocks will be a larger percentage of the fund’s holdings and the least valuable of the S&P 500 will be the smallest holding.
- SPY Top 5 Holdings
- 7.62% Nvidia
- 6.80% Apple
- 4.29% Microsoft
- 3.63% Amazon
- 3.20% Alphabet Inc, Class A
- SPY Top 5 Sectors
- 37.58% in Information Technology
- 12.00% in Financials
- 9.72% in Communication Services
- 8.85% in Industrials
- 8.75% in Healthcare
Here’s where we can see a clear difference between RSP and SPY. SPY holds nearly 200% more (in dollar amount) of IT stocks and consumer discretionary stocks don’t crack the top 5 sectors for SPY.
However, note that some indexes, such as the QQQ 100, will use a modified market capitalization that accounts for the ‘float’ or available shares of the company’s market capitalization. For example, with less than 5% of the SpaceX shares available in the stock market, even though the QQQ will add SpaceX to the index, it will do so at 5% of the market capitalization which will then make up less than 1% of the QQQ fund even though SpaceX now has a top market capitalization.
Back to the analysis, we can see that VOO’s fund is also weighted by market capitalization with similar percentages to SPY for holdings:
- VOO Top 5 Holdings
- 7.89% Nvidia
- 7.05% Apple
- 5.14% Microsoft
- 4.07% Amazon
- 3.41% Alphabet Inc, Class A
- VOO Top 5 Sectors
- 38.60% in Information Technology
- 11.30% in Financials
- 10.40% in Communication Services
- 9.70% in Consumer Discretionary
- 8.30% each in Healthcare and Industrials
The full sector discrepancy between VOO and SPY can’t be seen from the top 5 holdings, but some small variations can easily be seen, such as for their NVDA percentage with 7.89% for VOO and 7.62% for SPY. Whether or not those differences matter to you will likely be a matter of personal preference.
RSP’s equal-weighted fund will appeal to people who may be concerned about a tech bubble, yet want to remain invested in the S&P 500. Investing in RSP may protect that investment against an AI crash that would directly impact Nvidia, Microsoft, Amazon, and Alphabet by putting more money into other types of industries.
Fund Managers
Although we put this as the third priority to examine, notice that only VOO provides information on the web page regarding the management team. Partially, this could be because index funds tend to follow the index faithfully and managers will not play a big role in the fund performance.
However, you can find more information on the management teams if you look for them on the Morningstar website and check the “People” tab under each fund.
- RSP management information
- Four managers joined in 2018 (3) and 2020
- Longest active tenure is 8.2 years
- SPY
- Managed by a team since 1993
- No further information on specific people
- VOO indicates
- Fund established in 1975
- Global Equity Index Management team advised the Vanguard S&P 500 ETF since 2010
- Three managers run the fund and they joined in 2017, 2023, and 2025 respectively
Since these are index funds, there isn’t any information here that might make me want to pick one fund over another. I suppose if your arch enemy became a fund manager, then maybe you pick something else, but otherwise, index fund management teams don’t carry so much importance.
Fund Performance
These funds post performance data in a designated section of the web page to make finding the information simple.
- RSP
- 20.23% 1 year
- 8.45% 5 year (includes the down year of 2022)
- 11.86% 10 year (includes the down years of 2022, 2020, and 2008)
- SPY (pulling market value return numbers before tax)
- 29.72% 1 year
- 14.00% 5 year (includes the down year of 2022)
- 15.50% 10 year (includes the down years of 2022, 2020, and 2008)
- VOO (pulling market value return numbers)
- 29.92% 1 year
- 14.11% 5 year (includes the down year of 2022)
- 15.61% 10 year (includes the down years of 2022, 2020, and 2008)
Here you can see the power of the tech sector over the past 10 years and the past year for the largest companies (Nvidia, Google, etc.). The equal weighted fund returns one third less than the weighted funds for the past year as well as the 10 year period. I continue to root for the small companies, but they certainly don’t provide the same returns lately… or for the last decade.
You can also see a slight edge for VOO over SPY with the return. While I don’t know for certain, this could be the result of the lower expense ratio for VOO.
Fund Taxes
Each of the funds also lists the after-tax performance for each fund (although you may need to click a button or two to find them):
- RSP (pulling returns “After tax held”)
- 18.25% 1 year
- 8.39% 5 year (includes the down year of 2022)
- 11.60% 10 year (includes the down years of 2022, 2020, and 2008)
- SPY (pulling return after taxes on distributions)
- 21.74% 1 year
- 12.88% 5 year (includes the down year of 2022)
- 14.91% 10 year (includes the down years of 2022, 2020, and 2008)
- VOO (pulling returns after taxes on distributions)
- 21.94% 1 year
- 12.97% 5 year (includes the down year of 2022)
- 15.01% 10 year (includes the down years of 2022, 2020, and 2008)
As with many of the other factors, RSP continues to lag its S&P 500 Index competitors in returns after taxes and SPY and VOO remain relatively tied. Also note that these numbers will be updated regularly, so they may vary from these numbers which I updated on July 15, 2026.
Which Would I Pick?
My pick would depend upon my investing criteria. As someone just looking for an S&P 500 index fund, SPY and VOO appear very similar and I could do well just flipping a coin to pick either of them. However, I am also quite a fan of Vanguard’s investor-friendly structure as a company, so I might pick Vanguard’s VOO out of loyalty.
On the other hand, I could be interested in making additional money off of my investment with more advanced options such as shorting or options. In that case, SPY’s much higher average trading volume (62 million shares per day versus VOO’s 12 million shares) makes SPY the better choice because higher volume leads to a smaller gap between prices as well as more stability.
On my other, other hand, as a bit of a cynic, I worry that the artificial intelligence hype creates an over-inflated market and that the top tech companies may crash in a bubble! With that in mind, RSP would suffer less in a downturn than the other stocks, so that might be an excellent option for a hedge.
Do The Homework But Don’t Stress About It
It is important to try to do your best in investing and to do the basic research to understand where you are putting your money. Yet, if you begin stressing over fine details between very similar funds, you will be wasting your time and energy.
My cynical approach did not provide the maximum return in 2008 when I bought RSP instead of SPY. However, I still recognized a wonderful average of a 28% return before taxes before I sold them 10 years later to pay for college tuition bills.
Even if I could have done ‘better’ with SPY or VOO, I did just fine! Going forward, I might consider VOO, but more likely I’ll target a broader fund, such as the Vanguard Total US Stock Market ETF (VTI) or the Vanguard Total International Stock Market Fund (VXUS).
By picking a total stock fund, I get to have all of the big companies and all of the little guys too! Of course, I still need to do my homework to make sure these specific funds hold up against other potential funds… to be continued?
The analysis is excellent. The article demonstrates how challenging it can be to achieve a diverse portfolio.