VOO: What to Know About the First Trillion-Dollar ETF

The Vanguard S&P 500 ETF (VOO) is one of the least expensive ways to own what is one of the most heralded strategies among stock-market investors: Own the S&P 500.

None other than Warren Buffett, the Oracle of Omaha himself—considered by many to be the greatest investor in history—has said on multiple occasions that most investors, most of the time, should simply buy and hold an S&P 500 index fund and let it run. And on June 3, the exchange-traded fund eclipsed $1 trillion in assets under management, making it easily the most popular ETF and the first to ever clear the 13-digit milestone.

So who am I to disagree?

Today, I'll tell you all about the Vanguard S&P 500 ETF (VOO): Vanguard's massive S&P 500 index fund.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

What Is the VOO?

The Vanguard S&P 500 ETF is an index fund that tracks the S&P 500: America's chief stock-market index, made up of publicly traded stocks representing 500 of the largest U.S.-listed companies.

While most ETFs stand on their own, VOO is actually an ETF share class of Vanguard's S&P 500 index mutual fund, the Vanguard 500 Index Fund Admiral Shares (VFIAX). If that sounds familiar, it's because it's the first index fund ever launched. VFIAX went live in 1976 as the Vanguard First Index Investment Trust and kicked off index investing as we know it.

But fast-forward to today, and VOO has captured far more in assets than the mutual fund share class. And if you add its $1 trillion in assets to VFIAX's $660 billion, the S&P 500 strategy boasts a total $1.7 trillion in assets.

Why Should We Invest in the S&P 500?

VOO's $1 trillion in assets is testament enough to the S&P 500's success. But consider this: The three other S&P 500 ETFs—State Street SPDR S&P 500 ETF Trust (SPY), iShares Core S&P 500 ETF (IVV), and State Street SPDR Portfolio S&P 500 ETF (SPYM) have a combined—boast another $1.3 trillion combined. And that's not to mention all of the other S&P 500 trackers in the mutual fund world.

So, why does everyone want to get a piece of this index?

The S&P 500 Index is made up of 500 of America's largest companies—but you'll notice I didn't say the 500 largest American companies. That's because the index has a few qualification thresholds, and size is merely one.

To join the index, a company must have a market capitalization of at least $22.7 billion, its shares must be highly liquid (shares are frequently bought and sold), and at least 50% of its outstanding shares must be available for public trading. It also must have positive earnings in the most recent quarter, and the sum of its previous four quarters must be positive: two criteria that weed out a few of even Wall Street's biggest firms. (By the way: If a company that's already in the S&P 500 suddenly fails to meet a criterion, it's not automatically kicked out, but a selection committee might consider replacing that company with a different one.)

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The S&P 500 considered something of a gauge of the U.S. economy just because its components collectively represent the diversity of American industry. But it's hardly "balanced." The index, like many others, is market capitalization-weighted, which means the greater the company size by market cap (stock price x outstanding shares), the greater the "weight" it's given in the index, the greater the assets an index fund will invest in that company, and the more impact those shares have on the performance of the fund.

Still, it's an insanely popular index because of just how effective it is. 

Most advisors would tell you that the core of many portfolios' stock allocations should be a large-cap* fund. The thing is, many actively managed large-cap funds are tasked with beating the S&P 500 and … well, they struggle. Consider this from S&P Dow Jones Indices' year-end 2025 S&P Indices Versus Active (SPIVA) report:

“In our largest and most closely watched comparison, 79% of all active large-cap U.S. equity funds underperformed the S&P 500, worse than the 65% rate observed in 2024 and the fourth-worst year for active large-cap managers over the 25-year history of our SPIVA Scorecards.”

In general, that history is ugly. According to S&P Dow Jones Indices data, just 14% of actively managed large-cap mutual funds have outperformed the S&P 500 over the trailing 10-year period. That number ticks down to just above 10% when looking at the past 15 years. 

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"I know guys that rate active managers in all these categories, and even they're like, 'I'm not buying actively managed large blend; I'm just indexing,'" says Daniel Sotiroff, Senior Analyst for ETF and Passive Strategies at Morningstar. "Because it's so brutally tough to beat a dirt-cheap index fund in the large blend category."

* There are different ways to define "cap" levels. We're adhering to Morningstar's definition, which says the largest 70% of companies by market capitalization within a fund's "style" are large caps, the next 20% by market cap are mid-caps, and the smallest 10% by market cap are small caps.

What Does VOO Hold?

The Vanguard S&P 500 ETF, by virtue of tracking the S&P 500, attempts to replicate the index by holding the same companies in the same ratios as the index. And a reminder: VOO is market-cap weighted, so trillion-dollar-plus companies like Nvidia (NVDA) and Apple (AAPL) currently account for the largest "weights."

Let's quickly look at the top 10 holdings of this Vanguard ETF:

Technology is a huge part of the U.S. economy, and as you can see, the top 10 holdings include several technology stocks, and at considerable weights. Unsurprisingly, then, technology is the best-represented sector at 35% of assets. Financials (12%), communication services (11%), and consumer discretionary stocks (10%) are highly weighted, too. On the flip side, utilities, real estate, and materials each account for less than 3% of assets.

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High weights to any one sector can be problematic. A hit to the technology sector would cause more short-term harm to the VOO than weakness in any other sector. You might need to buy other complementary funds if you want more balanced sector exposure. 

But over the years, the S&P 500's sectors and holdings have shifted significantly several times, and that hasn't kept the index from delivering growth to people who have invested in S&P 500 funds.

How Much Does VOO Cost?

The Vanguard S&P 500 ETF is one of the cheapest ways to buy the S&P 500, at just 0.03% in annual fees, or 30¢ for every $1,000 invested.

I'll note that it's not the least expensive S&P 500 tracker, however.

The aforementioned State Street SPDR Portfolio S&P 500 ETF, which traded as SPLG until late 2025 before becoming SPYM, lowered its fee to 0.02%, making it the cheapest way to buy the S&P 500 (and putting it into our list of the market's best ETFs to buy).

Surprisingly, a few mutual funds undercut the VOO, too. Many of them are institutional-grade shares that you can only get through an advisor or an exceedingly high initial investment. However, Fidelity funds and Schwab funds offer Investor-class shares that are less expensive than all ETFs currently, and that are open to all investors. The Schwab S&P 500 Index Fund (SWPPX) also charges 0.02%, and the Fidelity 500 Index Fund (FXAIX) has a razor-thin expense ratio of just 0.015%. Investors can get started in either for as little as $1.

If you're choosing between otherwise identical index funds, you'll typically want to give the nod to whichever one charges the lowest expense ratio. That said, the Vanguard S&P 500 ETF is still an absurdly cheap way to get access to large-cap stocks, and depending on which investing platform you use, it might very well be your least expensive option.

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