IVV Offers Same S&P 500 Exposure as SPY at a Lower Fee
The article compares SPY and IVV, saying both hold the same S&P 500 stocks in the same weights. IVV charges 0.03% annually, while SPY charges 0.0945%, so the fee difference can reduce long-term returns for SPY holders. It also notes that switching may avoid taxes in retirement accounts but could trigger capital gains in taxable accounts.
SPY, introduced in 1993, was the first U.S. ETF and is structured as a unit investment trust, meaning it holds dividends as cash until distribution. IVV is an open-end fund, allowing internal dividend reinvestment and securities lending income. Both structural features modestly benefit IVV.
The funds' shared index means identical weights, so concentration is the same. A March 2026 SPY fact sheet listed NVIDIA at 7.58%, Apple at 6.66%, and Microsoft at 4.91%. Top holdings skew toward large technology and internet platforms, with Google represented through two share classes.
Long-term retirement savers could benefit most from lower fund fees, since small annual cost differences may compound over decades. Taxable investors weighing a switch may face capital gains that outweigh fee savings, so the decision could depend on account type and unrealized gains. The story may also encourage greater scrutiny of fund expenses and structural details, potentially shifting some assets toward lower-cost products while reminding investors that identical holdings do not guarantee identical outcomes.