What Is The Difference Between these two ETFs, IVV Vs. VOO?

If you’re new to investing in S&P 500 ETFs, Marjolein at Radical Fire has written this post comparing IVV Vs. VOO is great at explaining the difference between two major ETFs. Tim

Every investment strategy includes a diversified portfolio. Since markets tend to be volatile, having an investment portfolio with a diversified allocation will help you manage risk as well as diversify. This article will discuss IVV vs. VOO that you may consider in your investment strategies.

Many investors like to add ETFs to their portfolios, Exchange-Traded Funds (ETFs) are major financial securities. Today, two of the most popular securities you will find are IVV and VOO. 

IVV is issued by iShares Core, while Vanguard issues VOO. Both issuers are widely known and respected in the securities market, with Vanguard holding the mantle of the largest portfolio manager in the US.

Both IVV and VOO are widely circulated ETFs, and you will also find them publicly traded in investment apps and trading platforms. So if you are thinking of investing in any of these ETFs, that wouldn’t be a bad idea. 

However, you may have difficulty choosing due to their similarities and performance returns.

In this review, we pitch both against each other and analyze them independently and comparatively. In the end, the choice will be yours to decide which one you want to invest in.

IVV: IShares Core S&P 500 ETF

IVV or iShares Core S&P 500 ETF is created and managed by iShares Core. This ETF tracks the performance of large-cap companies and their equities in the S&P 500. As you must know, the S&P 500 index is a special index containing the 500 most profitable companies in the US, and their stocks are highly valued. 

IVV is designed to track and invest in these companies for the long term. This fund will invest about 80% of its worth into these stocks spread across different industries. While the remaining 20% will be invested into options, swap contracts, futures, and cash equivalents.

IVV is mainly influenced by the performance and price of the stocks it buys. So your investment appreciates relative to the growth and profitability of the stocks. Besides that, your investment is also influenced by the expenses and fees you are made to pay.

The managers of IVV use a replication strategy to track the index, which is about 77% of the total market capitalization of equities traded in the US market.

This ETF is a highly profitable fund. Although it has been a bit of a mixed bag for short-term investors over the last few years, the best approach to get your desired outcome is to invest in it long term. A long-term strategy will produce the right results because 80% of the stocks are high-valued with strong performance ratings.

Let’s review IVV’s top 10 holdings representing 29.94% of all assets.

AssetPercentage
Apple Inc.6.87%
Microsoft Corp.6.29%
Amazon.com Inc.3.83%
Alphabet Inc. Class A2.23%
Tesla Inc.2.17%
Alphabet Inc. Class C2.09%
NVIDIA Corp.1.98%
Meta Platforms Inc. Class A1.97%
Berkshire Hathaway Inc. Class B1.31%
JPMorgan Chase & Co.1.20%

VOO: Vanguard S&P 500 ETF

Vanguard is the largest fund manager in the US, and its ETFs are well-known in the financial market. One of their most successful funds is VOO or Vanguard S&P 500 ETF. This ETF is a fund that seeks to track stocks in the S&P 500 just like IVV.

Managers of VOO operate a replication strategy by investing all assets in profitable stocks in the S&P 500. Moreover, they give these stocks approximate asset values similar to the index rates of individual stocks.

When we review the top holdings of VOO, you will notice that it has the stocks of some of the largest companies in the US. This approach has placed this stock in good stead to deal with price imbalances and volatility in the market. Vanguard’s VOO tracks all the companies in the S&P and invests in all of them.

And these companies are spread across different industries from energy to IT, finance to technology, retail, consumer goods, and any top-performing sector you can think of. So if you were considering the possibility of investing in VOO, you should realize that this fund is highly diversified.

This makes it less susceptible to price volatility by a single asset or a set of assets. Neither will it be hugely affected by the poor performance of a few stocks. VOO is a very popular ETF widely circulated and considered one of the top-performing ETFs in the industry.

Let’s take a look at VOO’S top 10 holdings representing 29.05% of all assets.


Percentage
Microsoft Corp.6.35%
Apple Inc.6.00%
Amazon.com Inc.3.75%
Tesla Inc.2.31%
Alphabet Inc. Class A2.27%
Alphabet Inc. Class C2.13%
Meta Platforms Inc. Class A1.97%
NVIDIA Corp.1.62%
Berkshire Hathaway Inc. Class B1.36%
JPMorgan Chase & Co.1.29%

IVV Vs. VOO: Key Differences

IVV vs. VOO may be ETFs, but they have certain differences. These differences are so subtle they are almost non-existent. 

For VOO, the value of Assets Under Management (AUM) is $279.07 billion, while IVV has assets valued at $331.22 billion. 

IVV’s dividend yield is 1.25% relative to VOO’s 1.34%. 

VOO is a creation of Vanguard, a company founded by Jack Bogle, who is regarded by many as a legendary investor. Vanguard is the largest Investment company in the US. As for IVV, it is offered by iShares, a company owned by Blackrock, which many regards as the world’s largest investment firm. 

While many will not consider all these as technical differences, these were all the data we could find to separate both. Besides these features, nothing else differentiates IVV from VOO since they track the same stocks and have the same 0.03% expense ratio.

IVV Vs. VOO: Composition Differences

What are the compositional differences between IVV vs. VOO? Let’s have a look.

CategoryIVVVOO
TypeETFETF
SegmentUS-Large CapUS-Large Cap
IssuerBlackRockVanguard
Net worth$331.22 billion$279.07 billion
Expense0.03%0.03%
StylePassivePassive
Dividend Yield1.25%1.34%
IndexS&P 500S&P 500

IVV Vs. VOO: Performance Differences

Now, let’s take a look at their performance differences.

IVV Performance & Returns

PeriodReturns
YTD Returns26.52%
1-Month Return0.04%
3-Month Return4.05%
1-Year Return28.75%
3-Year Return23.35%
5-Year Return18.05%
10-Year Return16.30%

IVV Vs. VOO: Fees

Both funds have the same expense fees. IVV and VOO have the same expense ratio of 0.03%, which is relatively low.

Over many years, the management fees will not accumulate to take out a chunk of your investment which is a good thing. Perhaps, their low expense fees best explain why many consider them attractive funds for long-term investing.

IVV Vs. VOO: Frequently Asked Questions

Here are some of the frequently asked questions that can guide you to understand IVV vs. VOO better.

Is IVV Better Than VOO?

It depends on what you are looking for as an investor. If you are looking for a fund that will cost you very low fees, both funds are equal since they charge the same 0.03% fees. Plus overall, both funds track the same S&P stocks.

Is VOO The Same As IVV?

VOO and IVV are the same because they are ETFs tracking S&P 500 stocks. The only difference is their issuer, and VOO is issued by Vanguard, while iShares issues IVV.

Is IVV A Good ETF?

IVV is one of the best ETFs that has consistently delivered results. Its dividend yield has been positive yearly and is loaded with large-cap stocks. Since it is structured under the 1940 Act Fund, it is favorable for investors who wish to reinvest the dividends paid back into the fund. IVV is definitely a good ETF.

IVV Vs. VOO – What Is The Difference Between These ETFs?

Before investing, you will always need to do your own research and conduct the necessary due diligence. Now that you have read the advantages and disadvantages of IVV and VOO, you are already halfway there. 

You need to know your investment objective. Are you looking for a fixed income through a buy and sell approach, or are you here for the long run? Do you want to do passive investing, or do you want an actively managed portfolio?

So what’s the bottom line? The decision comes down to whether or not you’re a frequent trader. If the trading spread differences are larger between two funds, choosing the fund with the higher expense ratio may be the logical choice rather than trading with the cheaper ETF. Stock picking considers trading costs after all, right? Now, If you’re in it for the long haul, selecting the fund with the lower expense ratio is the way to go. 

Again, whatever is aligned to your investment objective should be the deciding factor when selecting which fund to choose.

Disclosure: The author is not a licensed or registered investment adviser or broker/dealer. They are not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.

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Tim Thomas has no positions in the stocks, ETFs, mutual funds, forex, or commodities mentioned.

This post originally appeared on Radical Fire and was syndicated by Tim Thomas / Timothy Thomas Limited.

Featured image credit: Unsplash.