SPYM vs IVV: Which S&P 500 Tracker Should Be in Your Portfolio?

The Core Question: What Sets These ETFs Apart?

When choosing between SPYM (SPDR Portfolio S&P 500 ETF) and IVV (iShares Core S&P 500 ETF), most investors face a similar dilemma: both funds track the same index and deliver nearly identical results, so does it really matter which one you pick? The short answer is that the differences exist but are subtle—yet they could still influence your decision depending on your investment style and portfolio size.

The Numbers Tell the Story

At first glance, these two S&P 500 trackers look virtually interchangeable. Both posted a 16.8% one-year return as of January 3, 2025, offer the same 1.13% dividend yield, and maintain a beta of 1.00, meaning they move in lockstep with the broader market. Over a five-year period, a $1,000 investment would have grown to approximately $1,829 in SPYM versus $1,828 in IVV—a negligible $1 difference.

The maximum drawdown figures also align closely, with SPYM experiencing a -24.49% trough against IVV’s -24.50% during the same window. These mirror-image outcomes reinforce what passive investors already know: when funds track the same 500 stocks, performance convergence is inevitable.

Where SPYM Gains Ground: The Fee Advantage

SPYM charges a 0.02% expense ratio compared to IVV’s 0.03%. While this 0.01% spread seems microscopic, it compounds over time. On a $10,000 investment, you’ll pay $2 annually with SPYM versus $3 with IVV. Scale this to a $100,000 position, and the difference reaches $10 per year. Over decades, these basis points matter—especially in a low-return environment.

For cost-conscious investors prioritizing expense ratios as the primary selection criterion, SPYM delivers the edge, even if marginally.

Why IVV Dominates in Scale and Liquidity

The landscape shifts dramatically when examining assets under management. IVV commands $733 billion in AUM compared to SPYM’s $97 billion. This sevenfold size advantage translates into superior liquidity and tighter bid-ask spreads, making it easier to execute large positions without moving the market.

Institutional investors and those deploying seven-figure sums should prioritize IVV’s greater depth. For retail investors trading in thousands or tens of thousands, however, this liquidity gap poses minimal practical concern.

Inside the Portfolios: Sector Breakdown and Holdings

Both funds hold 503 U.S. large-cap stocks with remarkably similar weightings. Technology dominates at approximately 35% of holdings, followed by financial services at 13% and communication services at 11%. The top three positions—Nvidia, Apple, and Microsoft—appear identically across both portfolios.

IVV boasts a 25-year track record with no structural quirks or overlays. SPYM operates under the same straightforward philosophy: provide pure S&P 500 replication without complex strategies or constraints. This consistency reinforces the “pick either one” conclusion for passive strategists.

The Practical Takeaway for Different Investor Types

Small to mid-size portfolios ($5,000–$250,000): SPYM edges ahead thanks to its lower fee structure. The annual savings accumulate, and liquidity remains more than adequate for typical trading volumes.

Large institutional positions ($1 million+): IVV’s superior AUM justifies selection. The enhanced liquidity prevents slippage that could cost more than the fee differential, especially when entering or exiting significant stakes.

Long-term buy-and-hold investors: The choice becomes nearly irrelevant. Pick one, commit, and ignore the 0.01% fee difference. Over 30-year horizons, both funds will deliver S&P 500 returns with negligible variance.

The Bottom Line

SPYM and IVV exemplify how commoditized index investing has become. They track identical holdings, post identical returns, and serve identical purposes. SPYM’s fractional fee advantage appeals to cost-minimizers, while IVV’s substantial asset base attracts those prioritizing execution quality. Neither fund contains surprises or structural disadvantages.

Your decision ultimately hinges on whether you value the tiniest expense ratio reduction or the liquidity cushion of a much larger fund. For the vast majority of passive S&P 500 investors, either choice leads to the same destination: diversified, low-cost exposure to America’s 500 largest companies.