State Street's SPYM Undercuts VOO with Lower Fee — Costs 0.02%
By John Nada·Jul 11, 2026·4 min read
State Street's SPYM ETF charges a lower fee than VOO at 0.02%. Could this price difference shift investor preference?
The investment landscape is vast, with a myriad of options available to those looking to grow their wealth over time. Among these options, Exchange-Traded Funds (ETFs) have emerged as a popular choice due to their diversified nature and cost-effectiveness. The Vanguard S&P 500 ETF (VOO) has long stood as a formidable pillar in the ETF market, recently achieving the milestone of surpassing $1 trillion in assets under management. Yet, a quieter challenger presents itself in the form of the State Street SPDR Portfolio S&P 500 ETF (SPYM), which offers a lower expense ratio of 0.02% compared to VOO's 0.03%, as reported by Yahoo Finance.
The Vanguard S&P 500 ETF has become synonymous with the concept of 'owning the market.' For many investors, VOO is the go-to choice for broad exposure to the S&P 500 index, which includes 500 of the largest publicly traded companies in the United States. Names like Apple, Microsoft, Nvidia, Amazon, and Meta populate the portfolios of both VOO and SPYM, ensuring that investors in either fund have stakes in the same stalwarts of the American economy. The familiarity of these household names, combined with the historical reliability of the S&P 500 index, provides a sense of security that often outweighs the potential savings offered by slightly lower fees.
Despite the dominance of VOO, the emergence of SPYM as a cheaper alternative raises pertinent questions about investor behavior and priorities. The difference between a 0.02% and 0.03% expense ratio may seem trivial at first glance—equating to a mere one dollar annually on a $10,000 investment. However, in the realm of investing, every basis point counts. Over time, even the smallest savings can compound, gradually enhancing overall returns. This minutiae of cost efficiency becomes particularly significant for large-scale investors who manage extensive portfolios, where the cumulative impact of fee differences becomes more pronounced.
A closer examination of SPYM and VOO reveals nearly indistinguishable portfolios. Both ETFs track the same S&P 500 index, leading to identical sector breakdowns and top holdings. This means that both funds offer exposure to the same economic sectors and companies. Consequently, their performance over time is nearly identical, with annual returns differing by only a few hundredths of a percentage point. For the average investor, this similarity means that choosing between these two ETFs often comes down to cost considerations.
However, cost is not the sole factor influencing investor decisions. The convenience and familiarity of a well-established fund like VOO cannot be understated. Many investors have become accustomed to the stability and reputation of Vanguard, which has played a significant role in maintaining VOO's popularity despite the marginally higher fee. For existing VOO holders, particularly those in taxable accounts, the potential tax implications and transaction costs associated with switching to SPYM can outweigh the benefits of saving one basis point in fees.
As investors weigh their options, it is crucial to consider the broader context of their investment strategy. While cost efficiency is important, the foundation of successful investing lies in maintaining a disciplined, long-term approach. This involves staying the course during market fluctuations and consistently contributing to one's investment portfolio. The allure of saving a few dollars annually should not distract from the larger goal of achieving sustainable growth over time.
The rise of SPYM as a viable alternative to VOO signals a shift in investor consciousness towards greater cost awareness. In a market where every basis point matters, the ability to offer lower fees can be a compelling selling point. Yet, the question remains: will this shift in focus lead to a significant migration of investors from VOO to SPYM? The answer likely depends on individual investor priorities and the extent to which they value cost savings over the familiarity and perceived stability of an established fund.
In the broader context of ETF investing, the competition between SPYM and VOO highlights the importance of evaluating all aspects of an investment product. Beyond fees and performance, factors such as fund management, liquidity, and tax implications play crucial roles in determining the suitability of an ETF for a particular investor's needs. As the ETF market continues to evolve, investors are encouraged to remain vigilant and informed, ensuring that their choices align with their long-term financial goals.
Ultimately, the decision between SPYM and VOO serves as a reminder that, while cost is a significant consideration, it is not the only one. A comprehensive understanding of one's investment objectives, combined with a thoughtful approach to risk management, remains the cornerstone of successful investing. As SPYM continues to grow in prominence, it may well prompt a reevaluation of traditional investment choices, but whether it will dethrone VOO as the preferred S&P 500 ETF remains to be seen.