The State Street SPDR S&P 500 Trust ETF (SPY) is one of the largest ETFs and is a core holding of many portfolios, while the State Street SPDR S&P 500 Value ETF (SPYV) is a popular “factor” ETF. In this context, factors are quantitative characteristics that index providers assign to stocks. In this case, SPYV targets value stocks (as they are defined by the index provider). Even though SPY and SPYV play different roles in a portfolio, many investors compare the SPYV vs SPY 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
SPYV essentially owns the subset of SPY’s holdings that are considered value stocks. SPY owns a more diverse portfolio including value stocks. Historical performance has not been that much different (since inception), but future performance will depend on how the value factor performs moving forward.
The Long Answer
Historical Performance: SPYV vs SPY
SPY was the first ETF (launched in 1993), while SPYV was launched later in 2000. Since then, performance has been incredibly close with an annualized difference of less than .1%. This has compounded over time though and the cumulative performance differential is about 11% (which is still very small over 22+ years)!
As the SPYV vs SPY chart shows, the SPY and SPYV each have had their periods of outperformance. It is anyone’s guess whether growth or value will perform better in the future.
Differences Between SPYV and SPY
The primary difference between these two funds is that SPYV tracks a value-oriented index, while SPY tracks a broader index.
Geographic Exposure
Both SPYV and SPY 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 SPYV and SPY are relatively similar as both are large-cap funds.
Sector Weights
There are some significant differences in sector weights, which makes sense based on the fact that SPYV is targeting the value factor and some sectors meet the value factor criteria more easily.
| SPYV | SPY | |
| Basic Materials | 2.56% | 2.22% |
| Consumer Cyclical | 11.29% | 10.47% |
| Financial Services | 18.79% | 12.05% |
| Real Estate | 4.48% | 2.51% |
| Communication Services | 10.14% | 8.89% |
| Energy | 1.44% | 4.24% |
| Industrials | 11.23% | 7.67% |
| Technology | 19.28% | 28.94% |
| Consumer Defensive | 6.88% | 6.68% |
| Health Care | 8.78% | 13.68% |
| Utilities | 5.32% | 2.67% |
Expenses
SPYV’s expense ratio is .04%, while SPY’s expense ratio is .0945%. Yes, SPY is 2x+ more expensive than SPYV, but we’re talking about 5 basis points! This in an non-issue in my opinion.
Transaction Costs
ETFs are free to trade at many brokers and custodians, so both SPYV and SPY 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 SPYV and SPY 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). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.
Alternative Vehicles
Investors limited to mutual funds should have no problem finding a mutual fund version of SPY or a mutual fund version of SPYV.
Investors planning to allocate more than $250,000 may consider direct indexing rather than an ETF or mutual fund, especially if they are in a high tax bracket. Any institutional direct indexer should be able to replicate SPY or SPYV easily.
Final Thoughts: SPYV vs SPY
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 SPY every time. However, investors looking for a satellite position in order to tilt their portfolio towards value could do a lot worse than using SPYV. At the end of the day, these two funds are not necessarily comparable because they play very different roles in a portfolio.
Further Reading
Readers interested in learning about similar funds from another sponsor want want to read up on Vanguard VOO vs VTV.
