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Top S&P 500 ETFs for Q3 2023

by Hataf Finance
8 minutes read

The S&P 500 Index has steadily increased since March 2023, recovering from losses late last year. It is now at its highest point since early 2022. For investors confident the market will continue its winning streak, we look at four exchange-traded funds (ETFs) that offer exposure to one of the U.S. stock market’s most closely followed benchmarks.

iShares Core S&P 500 ETF (IVV), Vanguard S&P 500 ETF (VOO), and SPDR Portfolio S&P 500 (SPLG) are tailored for investors seeking the lowest expense ratios. The SPDR S&P 500 ETF (SPY) is best for investors and active traders who want the most liquidity. Because these funds all track the S&P 500, and therefore tend to provide very similar performance, expense ratios and liquidity become primary considerations for potential investors.

Key Takeaways

  • The S&P 500 Index broke into bull market territory in early June after falling 25% from record highs reached in December 2021.
  • iShares Core S&P 500 ETF, Vanguard S&P 500 ETF, SPDR Portfolio S&P 500, and SPDR S&P 500 ETF give investors exposure to the index.
  • When selecting an S&P 500 ETF, investors should consider the fees they’ll pay and the liquidity of each fund.
  • Apple Inc. (AAPL) is the largest company in the S&P 500, and thus the top holding of each of these funds.

Below we take a closer look at four S&P 500 ETFs. We have excluded leveraged ETFs, which provide outsized returns but come with extra risk, as well as other funds providing varied exposure to the S&P 500 Index, such as the Invesco S&P 500 Equal Weight ETF (RSP), which aren’t included because they don’t track the S&P exactly. All data below is as of July 26.

  • Expense Ratio: 0.03%
  • Performance Over 1 Year: 17.1%
  • Annual Dividend Yield: 1.45%
  • 30-Day Average Daily Volume: 4,008,487
  • Assets Under Management: $350.1 billion
  • Inception Date: May 15, 2000
  • Issuer: BlackRock

  • Expense Ratio: 0.03%
  • Performance Over 1 Year: 17.1%
  • Annual Dividend Yield: 1.49%
  • 3-Month Average Daily Volume: 3,741,302
  • Assets Under Management: $334.7 billion
  • Inception Date: Sept. 7, 2010
  • Issuer: Vanguard

  • Expense Ratio: 0.03%
  • Performance Over 1 Year: 17.1%
  • Annual Dividend Yield: 1.47%
  • 3-Month Average Daily Volume: 3,149,160
  • Assets Under Management: $19.5 billion
  • Inception Date: Nov. 8, 2005
  • Issuer: State Street Global Advisors

Liquidity indicates how easy it is to buy or sell an ETF, with higher liquidity generally translating to lower trading costs. While trading costs aren’t a concern for investors holding ETFs long-term, active traders favor highly liquid funds to minimize costs.

  • Expense Ratio: 0.09%
  • Performance Over 1 Year: 17.0%
  • Annual Dividend Yield: 1.44%
  • 3-Month Average Daily Volume: 78,743,056
  • Assets Under Management: $427.8 billion
  • Inception Date: Jan. 22, 1993
  • Issuer: State Street Global Advisors

Why Expense Ratios Matter

Because these ETFs all follow the performance of the S&P 500 index, one of the most important determinants of long-term returns is how much a fund charges in fees. An ETF’s fees are measured by its expense ratio, which is the percentage of an investor’s assets that are kept by the fund manager to maintain the fund.

A fund’s expense ratio can significantly affect a long-term investor’s total returns. An investor who puts $10,000 in a fund that returns 10% every year will pay $336 in fees to a fund with a 0.5% expense ratio. The same investor would pay $1,682 in fees if they put the same money in a fund with a 2.5% expense ratio.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author owns SPY.

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