If You Own SPY, This Lower-Cost Fund Tracks Identical Holdings for Less Than Half the Fee

The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is the fund most investors picture when someone says “index fund.” SPY launched in 1993 as the first U.S. ETF. People own it for good reasons: one ticker buys the S&P 500, and SPY is widely held. BlackRock’s iShares Core S&P 500 ETF (NYSEARCA:IVV) tracks the same index and holds the same companies in the same weights. It also charges less. With identical portfolios, the fee is the difference that remains, and each issuer’s own U.S. fund materials confirm what each fund currently charges.

A Fee Gap SPY Holders Never See

State Street’s U.S. product page for SPY, accessed October 12, 2026, names the S&P 500 Index as its benchmark and lists a gross expense ratio of 0.0945%. BlackRock’s IVV prospectus filed with the SEC and dated July 31, 2026 lists a net expense ratio of 0.03%, and the gross figure is also 0.03%. SPY charges a higher annual fee for the same portfolio, so IVV holders keep more of the index’s return each year.

Both funds deduct fees internally. The fee comes out of fund assets continuously, a sliver at a time, and shows up only as a slightly lower share value. Because holders never see it leave, a fee gap can sit in a portfolio for years without anyone noticing.

The two funds are also built differently. SPY is a unit investment trust, which holds dividends in cash until it pays them out. IVV is an open-end fund, so it can reinvest dividends internally and earn securities lending revenue. Each effect is small, and both work in IVV’s favor.

What You Actually Own in Either Fund

State Street’s SPY fact sheet dated March 17, 2026 lists NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) at 7.58% of the fund, Apple (NASDAQ:AAPL) at 6.66%, and Microsoft (NASDAQ:MSFT) at 4.91%. Those March 17, 2026 weights are several months old and have changed since. Nearly every name in that fact sheet’s top ten is a large technology or internet platform, and Google appears twice through two share classes.

Anyone buying either fund for broad diversification is, in practice, making a large commitment to a handful of megacap technology companies. IVV tracks the same index, so its concentration is identical. That concentration matters if you assume the S&P 500 spreads risk equally.

Why SPY Versus IVV Return Charts Mislead

Two funds holding the same stocks in the same weights deliver returns that track each other very closely, so when a published comparison shows a visible gap between them, the cause is usually the calculation method.

A return figure can include dividends (total return) or reflect price changes alone. S&P 500 companies pay meaningful dividends. So comparing a price-only figure for one fund with a dividend-adjusted figure for the other creates a misleading gap. Before relying on any SPY versus IVV comparison, confirm that both funds were measured the same way.

Who Gains Little From Switching

SPY is known for deep trading liquidity. For active traders and options users, that depth matters because large orders fill easily and SPY options serve as a standard hedging tool. A long-term buy-and-hold investor rarely uses that liquidity but still pays the higher fee every year.

Switching costs money for many holders. Selling SPY outside a tax-sheltered account realizes any capital gain, and long-held positions may carry large embedded gains. That tax bill can outweigh years of fee savings.

The swap triggers no tax in an IRA or 401(k). Some holders send new contributions and dividends to IVV while leaving appreciated SPY shares alone, or swap only lots sitting near breakeven or at a loss. Tax-loss harvesters should ask a tax professional whether the IRS would treat two funds tracking the same index as substantially identical under wash-sale rules.

Where SPY Holders Go From Here

The fee comparison matters most for long-term investors. They hold SPY in tax-advantaged accounts, since IVV offers the same index and holdings at a lower fee. For taxable holders with large gains, embedded tax costs count against selling existing SPY shares, while new contributions carry no such cost. Active traders and options users who depend on SPY’s liquidity get the most value from its trading depth, and a fee cut that brings SPY down to IVV’s level is the one change that would eliminate this case.

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