Best S&P 500 Index Funds in 2026 [VOO vs. IVV vs. SPY vs. FXAIX]

By Nick

Published in Finance

March 22, 2026

4 min read

Key Takeaways

VOO and IVV are the best S&P 500 ETFs for long-term investors — both charge just 0.03% annually
FXAIX (Fidelity) is the best S&P 500 mutual fund at 0.015% — even cheaper than VOO or IVV
SPY charges 0.095% — three times more than VOO/IVV for identical performance — avoid it unless you’re an active trader
The S&P 500 has returned approximately 10.5% annually over the past 50 years before inflation; ~7% after inflation
Over 30 years, the 0.065% difference between SPY (0.095%) and VOO (0.03%) costs approximately $10,000+ on a $100,000 investment

The S&P 500 (Standard & Poor’s 500) is a stock market index tracking the 500 largest publicly traded U.S. companies by market capitalization. Maintained by S&P Dow Jones Indices, it includes companies like Apple, Microsoft, Amazon, Nvidia, Alphabet (Google), Meta, and Berkshire Hathaway.

The 500 companies in the index represent approximately 80% of the total U.S. stock market by value. When you buy an S&P 500 index fund, you own a tiny, proportional piece of all 500 companies — instant diversification across virtually every major sector of the American economy.

Companies are weighted by market cap — larger companies represent a larger percentage of the fund. As of early 2026, the top 10 holdings collectively represent about 35% of the index, with Apple and Microsoft alone accounting for approximately 13%.

S&P 500 Fund Comparison (2026)

Fund	Type	Expense Ratio	Min. Investment	Available At	Best For
VOO (Vanguard S&P 500 ETF)	ETF	0.03%	~$500/share or $1 fractional	All brokers	Long-term buy-and-hold investors
IVV (iShares Core S&P 500)	ETF	0.03%	~$580/share or $1 fractional	All brokers	Same as VOO — choose either
FXAIX (Fidelity 500 Index)	Mutual Fund	0.015%	$1	Fidelity accounts	Best expense ratio available
SWPPX (Schwab S&P 500 Index)	Mutual Fund	0.02%	$1	Schwab accounts	Schwab users
VFIAX (Vanguard 500 Admiral)	Mutual Fund	0.04%	$3,000	Vanguard accounts	Vanguard users
SPY (SPDR S&P 500 ETF)	ETF	0.095%	~$570/share or $1 fractional	All brokers	Active traders only

Prices as of March 2026. Fractional shares available at Fidelity, Schwab, and some other brokers.

VOO vs. IVV: Are They Really Identical?

Nearly. Both track the same index (S&P 500), charge the same fee (0.03%), and are managed by top-tier fund companies (Vanguard and BlackRock/iShares respectively). Historical returns have differed by less than 0.01% annually.

Minor differences:

Issuer: VOO is Vanguard; IVV is iShares (BlackRock)
Liquidity: IVV has slightly higher average daily trading volume, but both are highly liquid
Dividend schedule: Both pay quarterly dividends
Availability: Both available commission-free at all major brokers

The verdict: Flip a coin. Own whichever is slightly more convenient at your brokerage. Don’t overthink this.

*SandP500 Index Fund* — source: pexels.com

Why SPY Is Not Right for Long-Term Investors

SPY (SPDR S&P 500 ETF Trust) was the first ETF ever created — launched in January 1993 — and remains the most heavily traded ETF in the world by volume. Institutional traders and market makers use SPY extensively because of its exceptional liquidity and tight bid-ask spreads.

For long-term buy-and-hold investors, however, SPY’s 0.095% expense ratio vs. VOO/IVV’s 0.03% means you pay 3.2x more for identical returns.

The cost of choosing SPY over VOO on $100,000 over 30 years (10% annual growth assumed):

VOO at 0.03%: ~$1,741,000 final value, ~$5,600 in total fees
SPY at 0.095%: ~$1,722,000 final value, ~$17,500 in total fees
Difference: ~$19,000 lost to the higher expense ratio

The only reason to own SPY over VOO is if you’re actively trading and need the tightest possible bid-ask spreads for short-term positions — completely irrelevant for retirement investors.

S&P 500 Historical Performance

Time Period	Annualized Total Return
2025 (full year)	~25%
5 years (2021–2025)	~14.5% annualized
10 years (2016–2025)	~13.1% annualized
20 years (2006–2025)	~10.4% annualized
30 years (1996–2025)	~10.7% annualized
50-year average	~10.5% annualized
Inflation-adjusted (real) long-term	~7% annualized

Past performance doesn’t guarantee future results.

Major drawdowns the S&P 500 has survived:

2000–2002 Dot-com crash: −49%
2008–2009 Financial crisis: −57%
2020 COVID crash: −34% (recovered in 5 months)
2022 bear market: −25%

Investors who stayed invested through every one of these recovered fully and continued to new highs. This is the statistical argument for long-term index investing.

Where to Buy a S&P 500 Index Fund

If you’re at…	Best S&P 500 fund	Why
Fidelity	FXAIX	Cheapest expense ratio (0.015%)
Schwab	SWPPX or VOO	SWPPX (0.02%) is slightly cheaper; VOO available too
Vanguard	VOO or VFIAX	VOO has no minimum; VFIAX needs $3,000
Robinhood / Webull	VOO or IVV	Fractional shares from $1
M1 Finance	VOO or IVV	Pie-based automatic investing
Inside your 401(k)	Whatever the lowest-cost S&P 500 option is	Look for “S&P 500 Index” with lowest expense ratio

Should You Use S&P 500 or Total Market?

This is a common question. VTI (total U.S. market) holds 3,600+ companies including small and mid-cap stocks in addition to the large-cap stocks in the S&P 500. VOO holds only the 500 largest.

Historical performance: Nearly identical over long periods. Small-cap stocks theoretically offer a “size premium” but it hasn’t been consistently reliable.

The practical answer: Either is excellent. Many experts slightly prefer VTI for broader diversification. The difference in outcomes over 30 years is likely to be negligible. Own whichever you prefer and stay consistent.

FAQ

Is it safe to put all my retirement savings in an S&P 500 index fund? For younger investors (20–40 years from retirement), a 100% S&P 500 or total market allocation is well within the mainstream of financial advice. The diversification across 500 companies across all major industries provides substantial protection against any single company or sector failing. As you approach retirement (10–15 years out), gradually adding bonds for stability is generally recommended.

What if the market crashes right after I invest? This is the sequence-of-returns risk worry. Historically, every S&P 500 crash has eventually been followed by a recovery to new highs. For long-term investors with a horizon of 10+ years, temporary drawdowns are normal and expected. The worst time to be invested in stocks is in the 5 years immediately before you need the money — which is why gradually shifting toward bonds as retirement approaches matters.

How do dividends work in an S&P 500 fund? S&P 500 companies that pay dividends pass those dividends through to fund holders quarterly. Current S&P 500 dividend yield is approximately 1.3% annually. Most investors set dividends to automatically reinvest — buying additional shares, compounding over time.

Sources

Vanguard. VOO fund details. Vanguard.com.
iShares. IVV fund details. iShares.com.
Fidelity. FXAIX fund details. Fidelity.com.
S&P Global. S&P 500 Index. SPGI.com.

Related Articles:

Source: Vanguard, Fidelity, iShares fund data. Last verified: March 2026.

How This Fits Into Your Overall Financial Plan

Building wealth requires a deliberate order of operations. Before diving into any specific investment strategy, ensure:

1. Emergency fund: 3–6 months of expenses in a high-yield savings account earning 4.75–5.10%. Never invest money you might need in the next 12 months.

2. Employer 401(k) match: Always contribute enough to capture your full employer match before any other investing. A 50% match is a guaranteed 50% return — no investment beats it.

3. Tax-advantaged accounts first: Max your Roth IRA ($7,000 in 2026) before putting additional money in taxable accounts. See Roth IRA Contribution Limits 2026.

4. Low-cost, diversified index funds: The evidence is overwhelming that low-cost passive index funds outperform most actively managed alternatives over long periods. Keep fees below 0.10% annually.

The simplest complete portfolio: One total market index fund (VTI or FZROX) in a Roth IRA, automatic monthly contributions, held for decades. Everything else is optional enhancement.

Sources

Vanguard Investment Research. [The case for low-cost index funds]. Vanguard.com.
SPIVA. [S&P Indices Versus Active Funds Scorecard]. S&P Global, 2025.
IRS. Retirement Plans. IRS.gov.
Fidelity. Investment research and tools. Fidelity.com.

Last verified: March 2026.