Yes, absolutely, VOO and other low-cost, tax-efficient, well-diversified equity index mutual funds from Vanguard are an excellent investment.
They're basically the same, but VOO has a lower expense ratio, SPY is better for options trading due to liquidity.
Warren Buffett's Berkshire Owns 2 ETFs: SPY and VOO
SPDR S&P 500 ETF Trust SPY. Vanguard S&P 500 ETF VOO.
Average Return
In the past year, QQQ returned a total of 25.74%, which is slightly higher than VOO's 24.33% return. Over the past 10 years, QQQ has had annualized average returns of 18.26% , compared to 13.04% for VOO. These numbers are adjusted for stock splits and include dividends.
And Buffett knows it, too, as SPDR S&P 500 ETF Trust is one of Berkshire Hathaway's own holdings. "Buffett was a believer in investing in S&P 500 funds for their simplicity and low costs," said Todd Rosenbluth, head of research at TMX VettaFi.
It does pay a dividend, because it contains blue-chip stocks that are often reliable dividend stocks. All of the Dividend Aristocrats, a set of companies that have raised their dividends at least once a year for at least 25 years, are S&P 500 members, and thus VOO has exposure to all of them.
Alternatives to VOO and IVV
A prime competitor worth considering is the SPDR Portfolio S&P 500 ETF (SPLG). It tracks the same S&P 500 index as VOO and IVV but offers a slightly lower expense ratio at 0.02%. Another appealing feature of SPLG is its lower share price, around $64, compared to over $500 for IVV and VOO.
For example, you might buy SPY if you want to trade actively, or even venture into day trading, because of its high volume. You might consider buying VOO to hold over the long term because of its lower expenses.
There is no dollar value minimum investment for Vanguard's ETFs, however, the minimum investment for any market participant is the cost of one share.
Largest shareholders include Vanguard Group Inc, Jpmorgan Chase & Co, Bank Of America Corp /de/, Raymond James & Associates, Morgan Stanley, Envestnet Asset Management Inc, Goldman Sachs Group Inc, Jones Financial Companies Lllp, Acorns Advisers, LLC, and Wells Fargo & Company/mn .
Also, research suggests that when it comes to the S&P 500's historical returns, there's never been a bad time to buy as long as you're a long-term investor. Analysts at Crestmont Research examined the index's rolling 20-year total returns and found that every single one of those periods ended in positive gains.
For most investors, it probably doesn't make sense to own both. VTI and VOO both provide great diversification at a low cost. If you hold both in your portfolio, you'll have a lot of overlap between the two. However, you may find that your retirement plan at work doesn't offer a total stock market index fund like VTI.
VOO has a consensus rating of Moderate Buy which is based on 400 buy ratings, 99 hold ratings and 5 sell ratings. What is VOO's price target? The average price target for VOO is $621.22. This is based on 504 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
VOO appeals to investors because of its diversification and focus on large-cap equities, which tend to be more stable and have a strong history of profitability compared with smaller, riskier companies. Large-cap stocks dominate the fund, providing exposure to stocks with a blend of stability and growth potential.
SPY is more expensive with a Total Expense Ratio (TER) of 0.0945%, versus 0.03% for VOO. SPY is up 28.31% year-to-date (YTD) with +$7.13B in YTD flows. VOO performs better with 28.36% YTD performance, and +$103.99B in YTD flows.
Both VOO and FXAIX offer dividend reinvestment with no additional fee or commissions. At the purchase of the fund, both provide an option to select “reinvest” to buy additional shares. This is done automatically and helps compound an investment's growth continually, with virtually no extra effort.
VOO and IVV boast the lowest management fee at 0.03%, about one-third of the SPY ETF. While the difference between a 0.03%, and 0.0945% expense ratio may seem trivial, such fees can really add up. For every $10,000 invested, these respective fees equal $3 and $9.45 annually.
The 90/10 rule in investing is a comment made by Warren Buffett regarding asset allocation. The rule stipulates investing 90% of one's investment capital toward low-cost stock-based index funds and the remainder 10% to short-term government bonds.
Junk Bonds
Junk bonds are high-yield corporate bonds issued by companies with lower credit ratings. Because of their higher risk of default, they offer higher interest rates, potentially providing returns over 10%. During economic growth periods, the risk of default decreases, making junk bonds particularly attractive.