By WealthIQ Editorial | Last Updated: March 2026
VOO tracks the S&P 500 at 0.03% per year — and Warren Buffett has publicly said it’s what he wants his estate invested in after he’s gone. That’s a ringing endorsement, but it doesn’t mean VOO is the right choice for every investor at every stage.
Executive Summary
- VOO tracks the S&P 500 — 500 of the largest U.S. companies
- Expense ratio: 0.03% — one of the cheapest S&P 500 ETFs available
- AUM: ~$550B+ — one of the largest ETFs in the world
- 10-year annualized return: ~13.0% (as of early 2026)
Bottom line: VOO is a simple, low-cost, time-tested way to own the S&P 500. For most long-term investors, it’s as good as it gets.
What Is VOO?
VOO is the Vanguard S&P 500 ETF, launched in 2010. It tracks the S&P 500 Index — a benchmark of 500 large U.S. companies selected by a committee based on market cap, liquidity, and profitability. VOO owns these 500 companies in proportion to their market capitalization, so Apple, Microsoft, Amazon, and Nvidia together account for a significant share of the fund.
With an expense ratio of just 0.03%, VOO is one of the cheapest investments on the market. A $10,000 investment costs you $3 per year in fees. That’s not a typo.
Why Vanguard’s Structure Matters
Vanguard operates as a client-owned company — its fund investors effectively own the company. This structure creates a natural incentive to keep fees low indefinitely. Unlike publicly traded asset managers (which need to generate profits for shareholders), Vanguard can pass cost savings directly to fund investors. That’s a meaningful structural advantage over time.
VOO also benefits from Vanguard’s patented dual-share-class structure, which historically made the ETF more tax-efficient in taxable accounts.
VOO vs. SPY vs VOO comparison vs. IVV vs. FXAIX
There are four dominant S&P 500 index products. They all track the same index — but they differ in cost, structure, and where you can buy them.
*Approximate annualized returns as of early 2026. Past performance does not guarantee future results.
Key takeaway: For long-term buy-and-hold investors, VOO, IVV, and FXAIX are functionally identical in performance. SPY is slightly more expensive. FXAIX wins on raw cost — but only at Fidelity. If you invest elsewhere, VOO is the standard choice.
How VOO Generates Returns
VOO returns come from two sources:
- Price appreciation — as the underlying 500 companies grow in value, VOO’s share price rises proportionally.
- SCHD dividend ETFs — VOO distributes quarterly dividends from the earnings paid out by its holdings. The dividend yield typically runs around 1.2–1.5%.
Over the long run, the S&P 500 has delivered roughly 10–11% annualized returns including dividends. More recent 10-year stretches have been stronger due to the tech sector’s outsized growth.
| Fund | Expense Ratio | AUM (approx.) | 10-Yr Return* | Min Investment |
|---|---|---|---|---|
| VOO (Vanguard) | 0.03% | ~$550B | ~13.0% | 1 share (~$520) |
| SPY (State Street) | 0.0945% | ~$530B | ~12.9% | 1 share (~$520) |
| IVV (iShares) | 0.03% | ~$470B | ~13.0% | 1 share (~$520) |
| FXAIX (Fidelity) | 0.015% | ~$500B | ~13.0% | $1 (Fidelity only) |
Is This Right for You?Buy VOO
VOO is for investors who:
- Want simple, low-cost exposure to U.S. large-cap stocks
- Are long-term, passive investors who won’t try to time the market
- Use a brokerage other than Fidelity (where FXAIX might be preferable)
- Want a liquid, exchange-traded fund rather than a mutual fund
- Are comfortable with share-price investing vs. dollar-amount mutual fund purchasing
VOO is less ideal for investors who want exposure beyond large-cap stocks — for that, VTI review (total market) or a mix of VOO + VXF (extended market) would be better.
VOO in a Portfolio
Many investors use VOO as the centerpiece of a two- or three-fund portfolio:
- Two-fund: VOO (80%) + VXUS for international exposure (20% international)
- Three-fund: VOO + VXUS + BND (bonds, percentage depends on age and risk tolerance)
This approach is endorsed by John Bogle’s legacy, Warren Buffett’s own advice for average investors, and decades of academic research on passive investing.
Strengths and Weaknesses
Pros:
- Extremely low 0.03% expense ratio
- Massive liquidity — one of the most-traded ETFs globally
- Vanguard’s ownership structure keeps costs structurally low
- Available at virtually every brokerage
- Quarterly dividends
Cons:
- No micro- or small-cap exposure — misses 15–20% of U.S. market by count
- Share-price minimum (~$520 per share) — some brokers support fractional shares, others don’t
- Not the absolute cheapest (FXAIX at 0.015% wins for Fidelity users)
- Concentrated in top holdings — top 10 stocks are ~35% of the fund
Bottom Line
VOO is one of the best investment products ever created — low cost, highly liquid, broadly diversified among the largest U.S. companies, and backed by Vanguard’s client-first structure. For most investors outside of Fidelity, it’s the default S&P 500 choice for good reason. Buy it, hold it, and don’t overthink it.
Start investing in VOO today — commission-free:
Frequently Asked Questions
What is VOO ETF?
VOO is the Vanguard S&P 500 ETF, which tracks the performance of the S&P 500 Index — a benchmark of the 500 largest publicly traded U.S. companies. It is one of the largest and most popular ETFs in the world by assets under management. VOO gives investors broad exposure to the U.S. stock market at an extremely low cost.
Is VOO better than SPY?
VOO and SPY (SPDR S&P 500 ETF Trust) track the same index, so their performance is virtually identical. The key difference is cost: VOO has an expense ratio of just 0.03% vs. SPY’s 0.0945%. For long-term buy-and-hold investors, VOO’s lower fees make it the better choice, while SPY remains preferred by traders due to its higher liquidity and options volume.
What is VOO’s expense ratio?
VOO has one of the lowest expense ratios available at just 0.03% per year. That means for every $10,000 invested, you pay only $3 annually in fees. This ultra-low cost is one of the primary reasons VOO is consistently recommended for long-term investors.
How often does VOO pay dividends?
VOO pays dividends on a quarterly basis, typically in March, June, September, and December. The dividends come from the underlying dividend-paying stocks within the S&P 500. As of recent distributions, VOO’s dividend yield is approximately 1.3%–1.5% annually, which is reinvested automatically if you have a DRIP (dividend reinvestment plan) set up.
Is VOO a good long-term investment?
VOO has historically been an excellent long-term investment. The S&P 500 has delivered average annual returns of approximately 10% over the past century, including dividends. With its rock-bottom 0.03% expense ratio and broad diversification across 500 major U.S. companies, VOO is a foundational holding recommended by many financial advisors for retirement and wealth-building goals.