IVV vs VOO – Expense Ratios, Performance & Tax Efficiency

Updated March 13, 2024

When it comes to investing in the S&P 500, choosing the right Exchange-Traded Fund (ETF) can significantly impact your portfolio's performance. In the realm of top-performing index funds, the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO) stand out as leading options.

Investors seeking effective investment strategies often find themselves comparing IVV vs VOO returns to determine which ETF aligns best with their financial goals. Although both track the same index, subtle nuances in their offerings can influence an investor's choice.

Our ETF comparison aims to unpack the details, helping you navigate this financial decision with confidence.

Key Takeaways

  • Both IVV and VOO are designed to closely track the S&P 500, reflecting its performance with precision.
  • Investors can expect near-identical S&P 500 ETF performance from IVV and VOO in terms of year-to-date and long-term returns.
  • A detailed analysis of IVV vs VOO returns reveals marginal differences, highlighting the importance of individual investment strategies.
  • IVV and VOO not only track the same index but also share similar expense ratios and dividend yields, contributing to a comprehensive ETF comparison.
  • The choice between IVV and VOO may boil down to investor preference and the finer points of each ETF's investment structure.

Understanding IVV and VOO: An Overview

For investors keen on navigating the realm of Exchange-traded funds (ETFs), particular attention is often paid to products mimicking the performance of major indexes.

Among the plethora of investment options, IVV ETF and VOO ETF stand out as S&P 500 index tracking funds widely acclaimed for their sound management and consistent tracking of the broad U.S. large-cap equity market. 

The iShares Core S&P 500 ETF, known as IVV, is managed by iShares, an established name in the ETF space. Vanguard, a giant in the investment world, provides the Vanguard S&P 500 ETF (VOO), both aiming to mirror the S&P 500 Index meticulously.

  • IVV and VOO serve as excellent vehicles for diversified exposure to the top U.S. companies.
  • Managed by industry stalwarts, both ETFs offer a reliable investment experience.
  • Optimized for mirroring the S&P 500, these funds emphasize index tracking precision.

As financial instruments, they not only sync with the movements of the S&P 500 but also offer a transparent and convenient approach for individual investors to participate in the growth of the U.S. economy. Thus, whether it's the iShares IVV or Vanguard's VOO, investors are equipped with formidable tools to achieve their broad market aspirations.

The Motley Fool is a financial and investment advice company that provides expert analysis, stock recommendations, and educational content to help individuals make informed decisions in the world of investing. 

ABOUT the motley fool

  • Over 100 Stock Picks with 100%+ Returns
  • Community With 700,000+ Loyal Members
  • Money.com 2023 Best Customer Service
  • Averaged Stock Pick Return over 550% (vs. 139% for the S&P)

Performance Insights: Analyzing IVV vs VOO

When it comes to assessing the strength and reliability of investment vehicles, particularly S&P 500 ETFs like iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO), long-term performance metrics offer invaluable insights.

By examining the 10-year performance and investment growth of these funds, investors can discern the subtleties in their annualized returns and appreciate the compounding effects of long-term investing.

10-Year Annualized Returns Comparison

The pursuit of strong, steady returns is a marathon, not a sprint, and over the past decade, IVV and VOO have both demonstrated remarkable endurance.

Analyzing the 10-year performance data reveals that IVV has posted annualized returns of 12.95%, just a hair's breadth away from VOO's slightly more robust return of 12.97%. This razor-thin margin underlines the competitive nature of these two giants within the S&P 500 ETF marketplace.

Growth of Investment Over Time

Imagining the trajectory of a hypothetical $10,000 investment planted in the fertile ground of these ETFs can provide a clear picture of investment growth potential. Both IVV and VOO have yielded lush increases in value over time, benefitting from the fertile environment provided by a diversified portfolio of top-tier U.S. companies.

This testament to the enduring appeal of long-term investing in S&P 500 ETFs showcases how such investments can grow, and indeed flourish, through market cycles and economic changes.

Yield Analysis: Dividend Comparison between IVV and VOO

When assessing the value of exchange-traded funds (ETFs) like IVV (iShares Core S&P 500 ETF) and VOO (Vanguard S&P 500 ETF), the dividend yield is a key indicator for investors, especially those seeking passive income ETFs. Both IVV and VOO are known for their track record in delivering consistent dividends to shareholders.

The trailing twelve-month dividend yield for IVV stands at approximately 1.33%, which is marginally less than VOO's yield of 1.34%. This slight variance indicates a nearly equal potential for creating a stream of income through dividends.

Choosing between IVV vs VOO from an ETF income comparison perspective requires scrutiny beyond the mere decimals in yield percentages. Here are some considerations to keep in mind:

  • The stability of the dividend yield over time, understanding how it affects long-term passive income.
  • Distribution frequency, as it can impact cash flow for investors relying on regular income.
  • Tax implications of dividend distributions, highly relevant for structuring tax-efficient investment strategies.

Nonetheless, the similarities in dividend yields point to the conclusion that both IVV and VOO are capable of supplementing investors' portfolios with a healthy dose of predictable, passive returns, complementing the capital appreciation they offer by tracking the S&P 500 Index.

Cost Considerations: Exploring Expense Ratios of IVV and VOO

When it comes to low-cost index investing in the realm of S&P 500 ETFs, prospective investors typically train their sights on ETF expense ratios as a vital metric in fund selection.

Two prominent options in this category are iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO), which are notable for their cost efficiency.

Identical Expense Ratios: A Cost-Efficient Approach

The commitment of both IVV and VOO to maintain ultra-low expense ratios exemplifies why many investors are drawn to these funds. At just 0.03%, these expense ratios are among the lowest in the industry, signifying that both IVV and VOO are designed with the mindful investor in mind.

This uniformity allows for a level playing field where the decision between IVV vs VOO takes into account factors beyond just the fees.

The Impact of Fees on Long-Term Investments

It's critical to delve into the fee impact on returns, particularly when considering the compounding effect over a long-term investment horizon. While IVV vs VOO fees are equivalent, understanding how even small differences in expenses can influence returns over time is essential.

Luckily, the IVV vs VOO expense analysis yields a reassuring conclusion: neither will significantly undercut the other in terms of long-term investment costs, promising a sense of financial prudence and foresight to those dedicated to building their portfolios for the future.

Risk Comparison: Evaluating IVV vs VOO

When scrutinizing the popular S&P 500 trackers, IVV and VOO, savvy investors often delve into the intricacies of risk assessment. Understanding the subtleties of each fund's performance in response to market volatility is crucial for making informed decisions on portfolio allocation.

Let's unpack the risk-adjusted returns and dive into the metrics that set these two ETFs apart.

Understanding Risk-Adjusted Performance Metrics

Probing into the realm of risk-adjusted returns, IVV and VOO stand on equal footing, each brandishing a risk-adjusted performance metric of 3.01. This equivalence, mirrored in key indicators like the Sharpe Ratio, imparts confidence to investors by signaling a harmonious blend of risk and potential rewards.

Through these lenses, both ETFs showcase their deftness in delivering returns that are keenly aligned with the inherent risks they possess.

Maximum Drawdown and Volatility Analysis

The journey through the tumultuous landscape of investment volatility reveals a nuanced difference between IVV and VOO. IVV presents a stark maximum drawdown of -55.25% since its inception, which shadows the -33.99% of VOO, insinuating a marginally higher exposure to losses at IVV's peak turbulence.

Additionally, a meticulous look at volatility uncovers figures of 3.61% for IVV against VOO's 3.67%, painting a picture of near-identical fluctuation levels. This ETF risk evaluation equips investors with vital insights into the robustness and resilience that each fund is likely to uphold amidst market gyrations.

Conclusion

After a thorough analysis, we've disclosed that both the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO) offer robust pathways to emulate the celebrated S&P 500's performance.

These funds have demonstrated their ability to provide investors with nearly indistinguishable returns, anchored by low expense ratios and an admirable dividend yield. They stand as a testament to smart investing, each representing a gateway to the same basket of prestigious companies without excessive costs or risk disparity.

The primary consideration should be how each fund aligns with the investor’s financial objectives and their comfort with market volatility. Both IVV and VOO hold their ground as stalwarts among passive investment vehicles, aiming to simplify the journey towards financial growth.

FAQ

How do IVV and VOO ETFs compare in terms of their year-to-date performance?

Both IVV and VOO have shown identical year-to-date returns at 8.75%, reflecting their similar investment strategies in tracking the S&P 500 index.

Are the dividend yields of IVV and VOO comparable?

Yes, the dividend yields for IVV and VOO are very close, with IVV at approximately 1.33% and VOO at about 1.34%, making them comparable in terms of passive income potential.

Do IVV and VOO have the same expense ratio?

Both IVV and VOO boast a low expense ratio of just 0.03%, reflecting a cost-efficient approach to index fund investing without one having a clear cost advantage over the other.

Jerry Garnes

Follow me here

About the Author

Jerry Garnes is a seasoned writer in personal finance. His informative and insightful pieces have been featured by esteemed platforms like Bankrate, The Street, and Business Insider. In addition to his financial expertise, Jerry is a passionate poet and musician with a deep love for nature.

Related Posts


Best Backtesting Software For Stocks & Options

Best Backtesting Software For Stocks & Options

Best Stock Chat Rooms & Groups For Day Trading

Best Stock Chat Rooms & Groups For Day Trading

SPLG vs SPY – Comparing Expense Ratios & Performance

SPLG vs SPY – Comparing Expense Ratios & Performance

XLK vs VGT – Expense Ratios, Performance & Holdings

XLK vs VGT – Expense Ratios, Performance & Holdings