SPY charges 0.0945% annually, which is nearly five times more than SPYM. Both funds hold the identical 500 stocks at identical weights.
SPYM and VOO use open-end structures that reinvest dividends and earn securities-lending income, two advantages SPY's 1993-era UIT design cannot match.
SPY's unmatched options liquidity only benefits active traders. Long-term investors end up paying the premium for a feature they never use.
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If you own the SPDR S&P 500 ETF (NYSEARCA:SPY), you are paying a premium for an index that a sister fund from the same issuer will sell you for pennies. Same 500 stocks. Same weights. Different bill.
SPY charges a net expense ratio of 0.0945%, with no fee waiver in place because gross and net are identical. On a $10,000 position, that is roughly $9.45 a year. Compare that to the in-family alternative, State Street's own SPDR Portfolio S&P 500 ETF (NYSEARCA:SPYM), which carries an expense ratio of 0.02%. That is roughly $2 a year on the same $10,000. Vanguard's Vanguard S&P 500 ETF (NYSEARCA:VOO) sits in between at 0.03%, or roughly $3.
The gap looks tiny per year. It compounds into real money over a lifetime. Extend a $100,000 SPY position across two decades of compounding and the fee spread against SPYM quietly siphons off thousands of dollars that would otherwise stay in your account. The exposure you get for that extra fee is, holding for holding, indistinguishable. SPY's top 10 include NVIDIA at 7.58%, Apple at 6.66%, Microsoft at 4.91%, Amazon at 3.64%, and Alphabet Class A at 2.99%. SPYM's top 10, dated two weeks later, show NVIDIA at 7.57%, Apple at 6.66%, Microsoft at 4.91%, Amazon at 3.64%, and Alphabet Class A at 2.99%. Identical, to the second decimal.
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The fee gap is only the headline cost. SPY is structured as a unit investment trust, the oldest ETF wrapper in the market since its January 22, 1993 inception. A UIT cannot reinvest cash dividends internally and cannot lend securities to earn extra income for shareholders. That means two silent drags. First, dividends collected from the underlying 500 companies sit in cash inside the fund until the quarterly distribution. SPY's most recent ex-dividend date was June 18, 2026, with payment not scheduled until July 31, 2026, a 44-day lag during which cash cannot compound with the index. Second, no securities-lending rebate flows back to holders, unlike open-end structures used by VOO, IVV, and SPYM.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
