IVV is a 1940 Act Fund. As such, the iShares ETF may reinvest dividends, utilize securities lending and trade index futures if required, which help the fund better reflect the performance of the S&P 500 or lower tracking volatility.
Lastly, the Vanguard S&P 500 ETF (NYSEArca: VOO) with $5.6 billion in assets is the smallest of the three but it is also the cheapest at a 0.05% expense ratio.
“But while the estimated holding cost for VOO is less than SPY, the market impact is slightly higher,” Rawson said. “For buy-and-hold investors, holding costs have a bigger impact on returns than trading costs, which are incurred only when trading. What these means is that large dollar and rapid traders will continue to prefer to use SPY, but long-term investors who trade less frequently will prefer to use VOO.”
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.