FNCMX vs ONEQ

The Fidelity Nasdaq Composite Index Fund (FNCMX) and the Fidelity Nasdaq Composite ETF (ONEQ) are two of the largest index funds that track the Nasdaq Composite. Both FNCMX and ONEQ track the well-known Nasdaq Composite index. The funds look very similar and many investors ask what is the difference between FNCMX and ONEQ? The below post will compare FNCMX vs ONEQ.

The Short Answer

The main difference is that FNCMX is a mutual fund and ONEQ is an ETF; however investors should consider several other factors when deciding which is best.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: FNCMX vs ONEQ

Both ONEQ and FNCMX were launched back in September 2003. Since their common inception date, the two funds have performed nearly identically, with a difference of just .09% annually! The cumulative performance difference between these two funds has only been about 12% (over a 20+ year timeframe)! Thus, from a performance perspective, I would consider these two funds interchangeable.

Differences between FNCMX vs ONEQ

Both FNCMX and ONEQ track the Nasdaq Composite, so I will not delve into differences in geographic exposures, sector weights, or market cap coverage. For all intents and purposes, the portfolios are identical.

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Fidelity. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Fidelity does not participate in the pay-to-play arrangements (with their competitor custodians) that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Fidelity, it is generally free to trade FNCMX or ONEQ. However, only ONEQ is free to trade in many non-Fidelity accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .07% for ONEQ and individual investor trades will not generally be large enough to “move” the market. In the case of ONEQ, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). This is true of ONEQ and FNCMX, as ONEQ does not make capital gains distributions and FNCMX frequently does.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards FNCMX. If all ETFs, I might lean more towards ONEQ.

On this topic, investors may want to avoid using these two funds as tax loss harvesting substitutes for one another since they could be considered “substantially identical.”

Tradability

FNCMX does not have a stated minimum for purchases, although some brokerages (especially competitors of Fidelity) impose minimums. The minimum purchase size for ONEQ is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: FNCMX vs ONEQ

Both FNCMX and ONEQ are large, Nasdaq Composite index funds sponsored and managed by Fidelity. Performance has been nearly identical. I view FNCMX and ONEQ as essentially interchangeable and would not spend too much energy trying to decide which one is “better.” If I was investing in a taxable account, I would probably opt for ONEQ due to the tax efficiency edge.

However, there are some situations that may call for one fund versus another. For instance, many custodians offer free ETF trades, but charge trading fees or redemption fees for mutual funds. So I might select FNCMX or ONEQ solely based on where my account is held or whether I’m investing taxable vs retirement dollars. Despite these considerations, these two funds are very similar for all intents and purposes.

ONEQ vs QQQM

QQQM is a large, liquid Nasdaq 100 index ETF that many investors use (often in lieu of the larger and more expensive ETF QQQ). The NASDAQ Composite Index is one of the most popular and most-watched indices. Interestingly, QQQM does not track the NASDAQ Composite Index; QQQM tracks the Nasdaq 100 Index. In other words, “The NASDAQ” Composite Index is referred to in the news and displayed on websites/TV, while the NASDAQ 100 Index seems to be the benchmark for more investable funds and strategies. Despite their similar names, a comparison of the ONEQ vs QQQM reveals some major differences.

The ONEQ and QQQM have very different compositions, slightly different weights and exposures, and performance differences have reflected that.

A reminder that these are simply examples as this site does NOT provide investment recommendations.

Historical Performance: ONEQ vs QQQM

ONEQ is the older ETF with an inception date of October 1, 2003. QQQM was launched many years later in October 2020. Since that time, QQQM has outperformed ONEQ by a wide margin of nearly 2% annually. In other words, investing in QQQM would have beaten investing in “the Nasdaq” by quite a bit (over 4.5% over the past two and half years)!

Those looking to evaluate performance history before the 2000s should compare the index performance of these ETFs’ benchmarks and may want to read our post on the Nasdaq 100 vs Nasdaq Composite. Interested readers may also want to check out my post on QQQ vs QQQM or QQQ vs ONEQ. Investors looking for a mutual fund version of ONEQ should read my comparison of FNCMX vs QQQM.

Differences between ONEQ and QQQM

Overall, the two ETFs are very similar, since they are both based on the same universe of stocks. ONEQ holds approximately 1,000 stocks, while QQQM owns roughly 100 stocks. The NASDAQ site publishes the index methodologies for both the Composite and 100.

Geographic Exposure

Substantially all (95%+) of each ETF is composed of US-based companies, so I will not include the usual tables of countries, market classification, and so on.

Market Cap Exposure

QQQM holds the 100 largest stocks on the NASDAQ exchange (excluding financials), so it has a much larger weighting to large-caps than ONEQ which tracks the Composite Index. However, both ETFs use weighting methodologies based on market-cap, so large-caps dominate each ETF.

Below is an estimate of the market cap exposure as of 11/28/2022.

	ONEQ	QQQM
Large Cap	73%	93%
Mid Cap	16%	7%
Small Cap	10%	0%

Sector Weights

Given that ONEQ tracks a much broader index than QQQM, it is not surprising that the ONEQ owns more sectors and is less concentrated than QQQM. Below are the sector weightings of the two ETFs, as of 11/29/2022.

	ONEQ	QQQM
Basic Materials	0.39%	0.00%
Consumer Cyclical	14.17%	14.25%
Financial Services	5.53%	0.85%
Real Estate	1.23%	0.00%
Communication Services	13.18%	15.25%
Energy	0.82%	0.00%
Industrials	5.28%	5.07%
Technology	43.31%	47.92%
Consumer Defensive	5.08%	7.22%
Healthcare	9.89%	7.96%
Utilities	1.14%	1.48%

Final Thoughts: ONEQ vs QQQM

The decision of whether to invest in ONEQ vs QQQM comes down to whether an investor wants a more fund that is more concentrated in large-cap and tech or a more diversified portfolio. As the chart of ONEQ vs QQQM shows, QQQM has done better historically although this may not hold true moving forward (especially if tech and/or large-caps fall out of favor).

QQQ vs QQQM

The Invesco QQQ Trust (QQQ) and the Invesco Nasdaq 100 ETF (QQQM) are two of the largest ETFs in existence and both are sponsored by Invesco. As their names suggest, QQQ and QQQM are a core holding of many portfolios. Many investors compare QQQ vs QQQM in order to decide which should be the foundation of their portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

QQQ and QQQM are nearly identical is almost every way, although QQQM is slightly less expensive. In my opinion, 5 basis points is not material and I consider these two funds identical and interchangeable. The only exception would be if someone is utilizing options, as QQQ has a much more active options market.

The Longer Answer

These funds are identical in nearly every way, except QQQ is just slightly more expensive.

History of QQQ and QQQM

QQQ was the first Nasdaq 100 ETF (as well as the first tech-oriented ETF) to launch, back in 1999. This first mover advantage gave it an edge in accumulating assets under management (AUM) and became the liquid vehicle of choice for traders. Even as other Nasdaq and tech-oriented ETFs launched and competitors engaged in cutting fees, QQQ was able to command premium fees due its size and liquidity. However, other sponsors were able to begin capturing market share with ever decreasing costs. Invesco needed to respond with a lower cost option, but did not want to sacrifice their golden goose QQQ. So rather than cut QQQ’s fees, they launched QQQM at a lower fee level. Essentially, they created QQQM to compete with QQQ’s competitors without giving up the higher fees that QQQ was collecting. This is similar to what iShares did with EEM and IEMG or EFA and IEFA.

Investors looking for Nasdaq Composite exposure rather than Nasdaq 100 exposure may interested in my post comparing ONEQ vs FNCMX.

Historical Performance: QQQ vs QQQM

Since QQQM’s launch in October 2020, it has outperformed QQQ by .03% annually. This has mostly been driven by the fee differential of .05%. Again, I view these two funds are identical.

Differences Between QQQ and QQQM

These two funds are identical in nearly every way.

Geographic Exposure

QQQ and QQQM track the same Nasdaq 100 index and substantially all of the holdings are US-based companies.

Market Cap Exposure

The market cap exposures of QQQ and QQQM are identical, which is not surprising since they track the same index.

	QQQ & QQQM
Large Cap	94%
Mid Cap	6%
Small Cap	0%

Sector Weights

The sector weights between QQQ and QQQM are identical as well.

	QQQ & QQQM
Basic Materials	0.00%
Consumer Cyclical	14.89%
Financial Services	0.66%
Real Estate	0.22%
Communication Services	16.51%
Energy	0.41%
Industrials	3.89%
Technology	49.80%
Consumer Defensive	5.89%
Healthcare	6.57%
Utilities	1.16%

Transaction Costs

Both QQQ and QQQM are free to trade on many platforms. These are two of the largest and most liquid ETFs, so the bid-ask spreads are extremely low too.

Expenses

QQQ sports an .20% expense ratio, while QQQM has a slightly lower expense ratio at .15%. In other words, QQQ is 33% more expensive or 5 basis points more expensive than QQQM. That being said, I do consider 5 basis points to be a material cost or difference in this case.

Tax Efficiency & Capital Gain Distributions

As with most equity ETFs, neither QQQ nor QQQM makes capital gains distributions. Therefore, both funds are about as tax-efficient as can be.

Options Strategies

QQQ has a much more liquid options market, so any options-related strategies may call for QQQ rather than QQQM.

Final Thoughts: QQQ vs QQQM

Both QQQ and QQQM are large, core funds sponsored and managed by one of the largest asset managers in the world. Additionally, their underlying portfolios are identical and the two funds move in sync. Unless an investor is utilizing an options strategy, I do not think it matters whether someone chooses QQQ or QQQM.

Further Reading

Investors looking for a Nasdaq Composite index vehicle (rather than a Nasdaq 100 index fund) should read my post comparing QQQ and ONEQ or the lower-cost version QQQM vs ONEQ.

The Vanguard S&P 500 Growth ETF (VOOG) and the Vanguard Growth ETF are both popular “factor” ETFs sponsored by Vanguard. In this context, factors are quantitative characteristics that index providers assign to stocks. Investors (including myself) evaluating VUG vs VOOG may find it somewhat odd that Vanguard sponsors two different large-cap growth funds that look and act nearly identical.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

Both VOOG and VOOG own track large-cap growth indices. Historical performance has been nearly identical and I consider these two funds identical and interchangeable. VOOG is more expensive, but it is an immaterial difference in my opinion.

The Long Answer

Historical Performance: VUG vs VOOG

Both VOOG and VUG were launched in September 2010. Since then, performance has been identical with an annualized difference of only .06%! Interesting this is the exact same as the difference in the two funds’ expense ratios. The cumulative performance differential is about 3.5%.

Differences Between VUG and VOOG

The primary difference between these two funds is that VUG tracks the CRSP US Large Cap Growth Index, while VOOG tracks the broader S&P 500 Growth Index. Both have a similar number of stocks as well; VOOG owns 230 stocks, while VUG owns 253 (data as of 1/31/2023, per Vanguard).

Geographic Exposure

Both VUG and VOOG hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of VUG and VOOG are nearly identical.

	VUG	VOOG
Large Cap	86%	91%
Mid Cap	12%	9%
Small Cap	0%	0%

Sector Weights

There are some significant differences in sector weights, although these differences have not impacted performance historically.

	VUG	VOOG
Basic Materials	1.98%	2.42%
Consumer Cyclical	18.14%	9.87%
Financial Services	7.14%	7.56%
Real Estate	2.53%	1.07%
Communication Services	11.43%	7.00%
Energy	1.61%	8.22%
Industrials	4.74%	5.25%
Technology	40.70%	31.06%
Consumer Defensive	2.84%	7.19%
Health Care	8.90%	19.82%
Utilities	0.00%	0.54%

Expenses

VUG’s expense ratio is .04%, while VOOG’s expense ratio is .10%. Yes, VUG is 150% more expensive than VOOG, but we’re talking about 6 basis point! This in an non-issue in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both VUG and VOOG should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VUG and VOOG is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither VUG nor VOOG has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Final Thoughts: VUG vs VOOG

VOOG and VUG are identical in nearly every way even though they track slightly different indices. Portfolio composition differs a bit, but historical performance has been identical. Personally, I consider these two funds identical and interchangeable.

Investors wanting to see how these funds fare against a more diversified fund can read my comparison of VUG vs VOO and/or VOOG vs VOO (or even VUG vs QQQ or VOOG vs QQQ).

The Vanguard S&P 500 ETF (VOO) is one of the largest ETFs and is a core holding of many portfolios, while the Vanguard Growth ETF is a popular “factor” ETF. In this context, factors are quantitative characteristics that index providers assign to stocks. In this case, VUG targets growth stocks (as they are defined by the index provider). Even though VOO and VUG play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a factor or to benchmark a factor’s performance.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VUG only owns stocks that are classified as growth stocks. VOO owns a more diverse portfolio including growth stocks. Historical performance has been similar, but will depend on how the growth factor performs moving forward.

The Long Answer

Historical Performance: VUG vs VOO

Both VOO and VUG were launched in September 2010. Since then, performance has been relatively similar with an annualized difference of roughly .98%. This has compounded over time though and the cumulative performance differential is about 52%.

As the VUG vs VOO chart shows, the growth factor has really outperformed the broader market since their common inception. However, this did change in 2022 as lines begin to converge again. It is anyone’s guess whether growth or value will perform better in the future.

Differences Between VUG and VOO

The primary difference between these two funds is that VUG tracks the CRSP US Large Cap Growth Index, while VOO tracks the broader S&P 500 index.

Geographic Exposure

Both VUG and VOO hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of VUG and VOO are relatively similar.

	VUG	VOO
Large Cap	86%	85%
Mid Cap	12%	16%
Small Cap	0%	0%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that VUG is targeting the growth factor and some sectors meet the growth factor criteria more easily.

	VUG	VOO
Basic Materials	1.98%	2.52%
Consumer Cyclical	18.14%	10.38%
Financial Services	7.14%	13.99%
Real Estate	2.53%	2.88%
Communication Services	11.43%	7.83%
Energy	1.61%	5.06%
Industrials	4.74%	8.76%
Technology	40.70%	23.76%
Consumer Defensive	2.84%	7.13%
Health Care	8.90%	14.75%
Utilities	0.00%	2.94%

Expenses

VUG’s expense ratio is .04%, while VOO’s expense ratio is .03%. Yes, VUG is .33% more expensive than VOO, but we’re talking about 1 basis point! This in an non-issue in my opinion. Additionally, this represents a much better value than VOOG (interested readers can see my comparison of VOOG vs VOO or VUG vs VOO).

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both VUG and VOO should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VUG and VOO is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither VUG nor VOO has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Final Thoughts: VUG vs VOO

Both funds are great ETFs that do what they are designed to do. Generally speaking, I do not think factor ETFs should be the core of a portfolio. For a core position, I would personally choose VOO every time. However, investors looking for a satellite position in order to tilt their portfolio towards growth could do a lot worse than using VUG (although some may get similar results with something like QQQ). At the end of the day, these two funds are not necessarily comparable because they play very different roles in a portfolio.

Curious readers who want to read about VUG value-oriented counterpart can read my comparison of VTV vs VOO here.

The Vanguard S&P 500 ETF (VOO) is one of the largest ETFs and is a core holding of many portfolios, while the Vanguard S&P 500 Growth ETF is a popular “factor” ETF. In this context, factors are quantitative characteristics that index providers assign to stocks. In this case, VOOG targets growth stocks (as they are defined by the index provider). Even though VOO and VOOG play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a factor or to benchmark a factor’s performance.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VOOG essentially owns the subset of VOO’s holdings that are considered growth stocks. VOO owns a more diverse portfolio including growth stocks. Historical performance has been similar, but will depend on how the growth factor performs moving forward.

The Long Answer

Historical Performance: VOOG vs VOO

Both VOO and VOOG were launched in September 2010. Since then, performance has been relatively similar with an annualized difference of only .94%. This has compounded over time though and the cumulative performance differential is about 47%.

As the VOOG vs VOO chart shows, the growth factor has really outperformed the broader market since their common inception. However, this did change in 2022 as lines begin to converge again. It is anyone’s guess whether growth or value will perform better in the future.

Differences Between VOOG and VOO

The primary difference between these two funds is that VOOG tracks a growth-oriented index, while VOO tracks a broader index.

Geographic Exposure

Both VOOG and VOO hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of VOOG and VOO are relatively similar.

	VOOG	VOO
Large Cap	91%	85%
Mid Cap	9%	16%
Small Cap	0%	0%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that VOOG is targeting the growth factor and some sectors meet the growth factor criteria more easily.

	VOOG	VOO
Basic Materials	2.42%	2.52%
Consumer Cyclical	9.87%	10.38%
Financial Services	7.56%	13.99%
Real Estate	1.07%	2.88%
Communication Services	7.00%	7.83%
Energy	8.22%	5.06%
Industrials	5.25%	8.76%
Technology	31.06%	23.76%
Consumer Defensive	7.19%	7.13%
Health Care	19.82%	14.75%
Utilities	0.54%	2.94%

Expenses

VOOG’s expense ratio is .10%, while VOO’s expense ratio is .03%. Yes, VOOG is 3x+ more expensive than VOO, but we’re talking about 7 basis points! This in an non-issue in my opinion. Those looking for a lower expense vehicle, may want to consider Vanguard’s Growth ETF VUG (read my comparison of VUG vs VOO or VOOG vs VUG).

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both VOOG and VOO should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VOOG and VOO is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither VOOG nor VOO has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Final Thoughts: VOOG vs VOO

Both funds are great ETFs that do what they are designed to do. Generally speaking, I do not think factor ETFs should be the core of a portfolio. For a core position, I would personally choose VOO every time. However, investors looking for a satellite position in order to tilt their portfolio towards growth could do a lot worse than using VOOG. At the end of the day, these two funds are not necessarily comparable because they play very different roles in a portfolio.

Investors interested in evaluating an ETF like VOOG, but with a value tilt should check out our comparison of VOO vs VTV. Readers may also be interested in reading about VOOG vs QQQ.

The Vanguard S&P 500 ETF (VOO) is one of the largest ETFs and is a core holding of many portfolios, while the Vanguard Value ETF is a popular “factor” ETF. In this context, factors are quantitative characteristics that index providers assign to stocks. In this case, VTV targets value stocks (as they are defined by the index provider). Even though VOO and VTV play different roles in a portfolio, many investors compare the two funds in order to determine whether they should tilt their portfolio towards a factor or to benchmark a factor’s performance.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VTV essentially owns the subset of VOO’s holdings that are considered value stocks. VOO owns a more diverse portfolio including growth stocks. Historical performance has been similar, but will depend on how the value factor performs moving forward.

The Long Answer

Historical Performance: VTV vs VOO

VTV was launched in 2004, while VOO was launched in September 2010. Since then, performance has been relatively similar with an annualized difference of only .80%. This has compounded over time though and the cumulative performance differential is about 37%.

As the VTV vs VOO chart shows, the value factor has really lagged the broader market since VOO’s inception. However, this did change in 2022 as lines begin to converge again. It is anyone’s guess whether value or growth will perform better in the future.

Differences Between VTV and VOO

The primary difference between these two funds is that VTV tracks a value-oriented index, while VOO tracks a broader index.

Geographic Exposure

Both VTV and VOO hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.

Market Cap Exposure

Overall, the market cap exposures of VTV and VOO are relatively similar.

	VTV	VOO
Large Cap	79%	85%
Mid Cap	21%	16%
Small Cap	0%	0%

Sector Weights

There are some significant differences in sector weights, which makes sense based on the fact that VTV is targeting the value factor and some sectors meet the value factor criteria more easily.

	VTV	VOO
Basic Materials	2.92%	2.52%
Consumer Cyclical	2.51%	10.38%
Financial Services	20.63%	13.99%
Real Estate	3.22%	2.88%
Communication Services	4.44%	7.83%
Energy	8.18%	5.06%
Industrials	12.51%	8.76%
Technology	8.48%	23.76%
Consumer Defensive	10.93%	7.13%
Health Care	20.58%	14.75%
Utilities	5.61%	2.94%

Expenses

VTV’s expense ratio is .04%, while VOO’s expense ratio is .03%. Yes, VTV is 25% more expensive than VOO, but we’re talking about 1 basis point! This in an non-issue in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both VTV and VOO should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VTV and VOO is very low, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither VTV nor VOO has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Final Thoughts: VTV vs VOO

Both funds are great ETFs that do what they are designed to do. Generally speaking, I do not think factor ETFs should be the core of a portfolio. For a core position, I would personally choose VOO every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using VTV. At the end of the day, these two funds are not necessarily comparable because they play very different roles in a portfolio.

The Vanguard S&P 500 ETF (VOO) and the iShares Core S&P 500 ETF (IVV) are two of the largest S&P 500 ETFs and are sponsored by Vanguard and Blackrock respectively. VOO and IVV are a core holding of many investor portfolios and many investors compare VOO vs IVV in order to decide which should be the foundation of their portfolio.

The Short Answer

VOO and IVV identical in nearly every way and risk/return between these two funds is nearly identical and I consider them interchangeable.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: IVV vs VOO

IVV was launched back in 2000, while IVV was launched a decade later in September 2010. Since then, performance has been identical with VOO outperforming by .02% annually. The cumulative performance differential over the past decade plus is less than 1%!

Differences between IVV vs VOO

These two funds track the same S&P 500 index and so there are almost no differences between the funds.

Geographic Exposure

Both VOO and IVV hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.

Market Cap Exposure

Again, I won’t dig into market cap exposures since they are identical for IVV and VOO.

Sector Weights

VOO and IVV sector weights are also identical.

Expenses

Both funds have an expense ratio of .03%, which is extremely low.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both VOO and IVV should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VOO and IVV is about .01%, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). VOO has never made a capital gains distribution and IVV has not made a capital gains distribution since 1996 (and I do not expect it to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Options Strategies

Neither VOO nor IVV has a great options market, despite their enormous AUM. Investors looking to integrate options strategies into their S&P 500 exposure may want to look at SPY. It is more expensive than VOO or IVV, but it has the most liquid options of any ETF. Those interested should read my reviews of IVV vs SPY or VOO vs SPY.

Final Thoughts: IVV vs VOO

Both VOO and IVV are large, core funds sponsored and managed by two of the largest investment sponsors in the world. I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better.” In my opinion, both funds are among the best S&P 500 ETFs out there and investors cannot really go wrong with either.

The SPDR S&P 500 ETF Trust (SPY) and the iShares Core S&P 500 Index ETF (IVV) are two of the largest S&P 500 ETFs and are sponsored by State Street and Blackrock respectively. SPY and IVV are a core holding of many investor portfolios and many investors compare SPY vs IVV in order to decide which should be the foundation of their portfolio.

The Short Answer

SPY and IVV identical in nearly every way, except SPY is a higher cost vehicle than IVV. Despite these differences, the risk and return between these two funds is nearly identical and I consider them interchangeable.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: IVV vs SPY

SPY was the first ever ETF and launched 1993, while IVV was launched a few years later in September 2000. Since then, performance has been nearly identical with IVV outperforming by .02% annually. The cumulative performance differential over the past decade plus is less than 2%. As the SPY vs IVV chart below indicates, the two funds are identical.

Differences between IVV vs SPY

These two funds track the same S&P 500 index and so there are almost no differences between the funds.

Geographic Exposure

Both SPY and IVV hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.

Market Cap Exposure

Again, I won’t dig into market cap exposures since they are identical for IVV and SPY.

Sector Weights

SPY and IVV sector weights are also identical.

Expenses

As the first mover, SPY was able to capture market share early which has led to higher trading volumes and so on. As a result, SPY has been able to charge a premium relative to its competitors (like IVV). SPY’s expense ratio is .0945%, while IVV’s is less than a third of that at .03%. Although SPY is 3x more expensive than IVV, we are only talking about .06% which is immaterial in my opinion.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SPY and IVV should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SPY and IVV is about .01%, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). IVV has never made a capital gains distribution and SPY has not made a capital gains distribution since 1996 (and I do not expect it to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Options Strategies

The one situation where I would recommend SPY rather than IVV is if an investor plans to integrate covered calls or other options strategies since SPY options are WAY more liquid than IVV. Or someone might want to use IVV to avoid triggering wash sales with their SPY options. It is just something to keep in mind.

Final Thoughts: IVV vs SPY

Both SPY and IVV are large, core funds sponsored and managed by two of the largest investment sponsors in the world. Although SPY is more expensive than IVV, performance has been extremely similar.

I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better.” In my opinion, both funds are among the best ETFs out there and investors cannot really go wrong with either.

The SPDR S&P 500 ETF Trust (SPY) and the Vanguard S&P 500 ETF (VOO) are two of the largest S&P 500 ETFs and are sponsored by State Street and Vanguard respectively. SPY and VOO are a core holding of many investor portfolios and many investors compare SPY vs VOO in order to decide which should be the foundation of their portfolio.

The Short Answer

SPY and VOO identical in nearly every way, except SPY is a higher cost vehicle than VOO. Despite these differences, the risk and return between these two funds is nearly identical and I consider them interchangeable.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Long Answer

Historical Performance: VOO vs SPY

SPY was the first ever ETF and launched 1993, while VOO was launched a year later in September 2010. Since then, performance has been nearly identical with VOO outperforming by .06% annually. The cumulative performance differential over the past decade plus is about 3%.

Differences between VOO vs SPY

These two funds track the same S&P 500 index and so there are almost no differences between the funds.

Geographic Exposure

Both SPY and VOO hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical exposures.

Market Cap Exposure

Again, I won’t dig into market cap exposures since they are identical for VOO and SPY.

Sector Weights

SPY and VOO sector weights are also identical.

Expenses

As the first mover, SPY was able to capture market share early which has led to higher trading volumes and so on. As a result, SPY has been able to charge a premium relative to its competitors (like VOO). SPY’s expense ratio is .0945%, while VOO’s is less than a third of that at .03%. Although SPY is 3x more expensive than VOO, we are only talking about .06%. Perhaps not surprisingly, this is the amount by which VOO has outperformed SPY on an annualized basis. See above.

Transaction Costs

ETFs are free to trade at many brokers and custodians, so both SPY and VOO should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both SPY and VOO is about .01%, so individual investor trades will not generally be large enough to “move” the market.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). VOO has never made a capital gains distribution and SPY has not made a capital gains distribution since 1996 (and I do not expect it to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.

Options Strategies

The one situation where I would recommend SPY rather than VOO is if an investor plans to integrate covered calls or other options strategies since SPY options are WAY more liquid than VOO. Or someone might want to use VOO to avoid triggering wash sales with their SPY options. It is just something to keep in mind.

Final Thoughts: VOO vs SPY

Both SPY and VOO are large, core funds sponsored and managed by two of the largest investment sponsors in the world. Although SPY is more expensive than VOO, performance has been extremely similar.

I view these two funds as essentially interchangeable and would not spend too much energy splitting hairs to decide which one is “better.” In my opinion, both funds are among the best ETFs out there and investors cannot really go wrong with either.