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S&P 500 exchange-traded funds (ETFs) remain among the most popular investment vehicles available.
S&P 500 ETFs give exposure to hundreds of leading U.S. companies through a single investment.
Best S&P 500 ETFs to buy now include SPY, SPYM, VOO and IVV.
The S&P 500 is widely considered the benchmark for the U.S. stock market, tracking 500 of the largest publicly traded companies in the United States. For investors seeking broad diversification, low costs, and long-term growth potential, S&P 500 exchange-traded funds (ETFs) remain among the most popular investment vehicles available.
While many ETFs track the same index, differences in expense ratios, liquidity, trading volume, fund structure, and issuer reputation can make one ETF more suitable than another depending on your investing goals.
Are S&P 500 ETFs Worth Buying?
For many investors, S&P 500 ETFs provide a simple way to gain exposure to hundreds of leading U.S. companies through a single investment. The index includes businesses across technology, healthcare, financial services, consumer goods, energy, and industrial sectors.
Historically, the S&P 500 has delivered strong long-term returns despite periodic market downturns. Because index ETFs passively track the benchmark rather than relying on active management, expenses tend to be significantly lower than traditional mutual funds.
Potential advantages include:
Broad diversification across 500 large-cap stocks.
Low annual fees.
Long-term capital appreciation potential.
Dividend income from underlying holdings.
Easy access through most brokerage accounts.
Investors should remember that S&P 500 ETFs are still stock-market investments and can experience significant declines during bear markets and recessions.
Zacks proprietary quantitative models divide each set of ETFs following a similar investment strategy (style box/industry/asset class) into three risk categories- High, Medium, and Low. The aim of our models is to select the best ETFs within each risk category, so that investors can pick an ETF that matches their particular risk preference in order to better achieve their investment goals.
Med
Sector:Large Cap Blend
Expense Ratio:0.0945%
Dividend (Yield): $9.29 (1.24%)
Year of Inception:1993
Price Premium/Discount (Month End):-9.54
Our Take:
Reasons to Buy
Exceptional liquidity.
Tight bid-ask spreads.
Large options market.
Accurate index tracking.
Potential Risks
Higher expense ratio than newer competitors.
Less tax-efficient structure than some rival ETFs.
Long-term investors may find lower-cost alternatives more attractive.
Launched in 1993, SPY was the first U.S.-listed ETF and remains one of the most heavily traded funds in the world. The fund seeks to replicate the performance of the S&P 500 Index by holding all constituent stocks.
Because of its massive trading volume, SPY is frequently used by institutional investors, traders, and options market participants. That trading ecosystem also makes the fund especially relevant in volatile markets, when liquidity, execution efficiency, and hedging flexibility can matter more than a modest fee advantage.
Zacks proprietary quantitative models divide each set of ETFs following a similar investment strategy (style box/industry/asset class) into three risk categories- High, Medium, and Low. The aim of our models is to select the best ETFs within each risk category, so that investors can pick an ETF that matches their particular risk preference in order to better achieve their investment goals.
NA
Sector: Large Cap Blend
Expense Ratio: 0.02%
Dividend (Yield):$1.12 (1.28%)
Year of Inception:2005 (formerly SPLG)
Price Premium/Discount (Month End): -1.14
Our Take:
Reasons to Buy
Extremely low expense ratio.
Broad diversification.
Strong long-term tracking.
Suitable as a core portfolio holding.
Potential Risks
Lower trading volume than SPY.
Less active options market.
May have slightly wider spreads during volatile periods.
SPYM is designed to deliver S&P 500 exposure at one of the lowest costs in the ETF industry. The fund tracks the same benchmark as SPY but charges substantially lower annual expenses.
For investors focused on minimizing fees over decades of investing, the cost difference can significantly improve net returns. That makes SPYM particularly compelling as a core allocation for disciplined, long-horizon investors, although its lighter trading activity may make it less appealing for frequent tactical moves.
Zacks proprietary quantitative models divide each set of ETFs following a similar investment strategy (style box/industry/asset class) into three risk categories- High, Medium, and Low. The aim of our models is to select the best ETFs within each risk category, so that investors can pick an ETF that matches their particular risk preference in order to better achieve their investment goals.
Med
Sector: Large Cap Blend
Expense Ratio: 0.03%
Dividend (Yield): $7.13 (1.04%)
Year of Inception:2010
Price Premium/Discount (Month End):-7.23
Our Take:
Reasons to Buy
Very low expense ratio.
Vanguard's strong indexing track record.
High liquidity.
Ideal for long-term wealth building.
Potential Risks
Performance will closely mirror market declines.
Heavy exposure to mega-cap technology stocks.
Limited international diversification.
VOO has become one of the most popular S&P 500 ETFs thanks to Vanguard's reputation for low-cost indexing. The fund tracks the S&P 500 Index and holds the same underlying companies as SPY and IVV.
Because of its low fees and large asset base, VOO is frequently recommended as a foundational long-term investment. It fits especially well as a set-it-and-forget-it core holding, though investors should recognize that returns will still be heavily influenced by the performance of the index's largest technology names.
Zacks proprietary quantitative models divide each set of ETFs following a similar investment strategy (style box/industry/asset class) into three risk categories- High, Medium, and Low. The aim of our models is to select the best ETFs within each risk category, so that investors can pick an ETF that matches their particular risk preference in order to better achieve their investment goals.
Med
Sector: Large Cap Blend
Expense Ratio: 0.03%
Dividend (Yield): $8.19 (1.09%)
Year of Inception:2000
Price Premium/Discount (Month End):-9.75
Our Take:
Reasons to Buy
Low expense ratio.
Excellent index tracking.
Large asset base.
Strong institutional support.
Potential Risks
Market risk remains significant.
Similar concentration risks as other S&P 500 funds.
Limited exposure to small-cap stocks.
IVV is BlackRock's flagship S&P 500 ETF and one of the largest ETFs globally. The fund combines low fees, deep liquidity, and a long operating history.
Institutional investors frequently use IVV because of its size and efficient structure. Its scale and structure also make it well suited for buy-and-hold investors seeking a durable core U.S. equity position, particularly in tax-aware portfolios where operational efficiency can support long-term compounding.
Methodology
The ETFs selected for this list were evaluated using several criteria:
Expense ratios.
Assets under management.
Trading volume and liquidity.
Historical tracking accuracy.
Long-term performance.
Investor accessibility.
Reputation of the fund sponsor.
Funds were selected because they offer broad exposure to the S&P 500 while serving different investor needs, from active trading to long-term buy-and-hold investing.
S&P 500 ETFs are exchange-traded funds designed to track the performance of the S&P 500 Index. They hold shares of the same companies that make up the index, allowing investors to gain diversified exposure through a single purchase.
How Do S&P 500 ETFs Work?
Fund managers buy and hold stocks that mirror the index. As companies enter or leave the S&P 500, the ETF adjusts its holdings accordingly. Investors buy ETF shares on stock exchanges throughout the trading day.
Benefits of Buying S&P 500 ETFs
Broad diversification.
Low management fees.
Strong historical returns.
Easy portfolio construction.
Dividend income potential.
High transparency.
Risks of Buying S&P 500 ETFs
Market volatility.
Economic recessions.
Concentration in large-cap stocks.
Reduced exposure to international markets.
Potential declines during bear markets.
Do S&P 500 ETFs Pay Dividends?
Yes. Most S&P 500 ETFs distribute dividends received from their underlying holdings. Distribution schedules are typically quarterly, although policies vary by fund.
What Is the Tracking Error?
Tracking error measures how closely an ETF follows its benchmark index. Lower tracking error generally indicates better replication of index performance.
What Is the Difference Between an S&P 500 ETF and an S&P 500 Index Fund?
Both track the same benchmark. ETFs trade throughout the day like stocks, while traditional index mutual funds are priced once per day after markets close.
How to Choose S&P 500 ETFs
When comparing funds, investors should evaluate:
Expense ratio.
Liquidity.
Assets under management.
Tracking accuracy.
Tax efficiency.
Brokerage availability.
Is SPY Too Expensive for Long-Term Holding?
Not necessarily. SPY remains popular because of its liquidity and trading flexibility. However, long-term investors focused primarily on minimizing fees may prefer VOO, IVV, or SPYM, all of which charge lower annual expenses.
Should I Buy an Equal Weight S&P 500 ETF (RSP) Instead?
An equal-weight ETF such as the Invesco S&P 500 Equal Weight ETF (RSP) gives every company the same weighting rather than allowing the largest firms to dominate the index.
Potential advantages include:
Less concentration in mega-cap technology stocks.
Greater exposure to mid-sized companies.
Potential outperformance during broader market rallies.
However, equal-weight funds generally have higher turnover and expenses.
Is It Safe to Buy S&P 500 ETFs at an All-Time High?
Historically, markets spend a significant amount of time near record highs. While short-term pullbacks are always possible, long-term investors often benefit more from consistent investing than trying to perfectly time market peaks and valleys.
How to Buy S&P 500 ETFs
Open a brokerage account.
Fund the account.
Research available ETFs.
Select the desired fund.
Place a market or limit order.
Continue investing regularly over time.
Can I Buy the S&P 500 Directly?
No. The S&P 500 is an index, not a security. Investors gain exposure through ETFs, index mutual funds, futures contracts, or other financial products designed to track the benchmark.
Is the S&P 500 Sufficiently Diversified?
The index provides exposure to 500 large U.S. companies across multiple industries, making it highly diversified relative to individual stocks. However, investors seeking broader diversification may supplement S&P 500 ETFs with international stocks, small-cap funds, bonds, or alternative assets.
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