Top S&P 500 ETFs for Q3 2023

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.

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.

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