SPY and IVV own essentially the same S&P 500 portfolio, but they are built for different jobs. State Street's SPY is the original U.S.-listed exchange-traded fund and a major trading vehicle. BlackRock's IVV offers the same index exposure with a lower annual expense ratio.
SPY's official page lists a gross expense ratio of 0.0945%. IVV's July 31, 2026 prospectus cited in the source article lists 0.03%. The difference is 0.0645 percentage points a year, or about $64.50 annually on every $100,000 invested, before compounding and any changes in fees.
Structure and trading needs
SPY is organized as a unit investment trust, an older structure with restrictions that open-end ETFs do not share. IVV can reinvest dividends inside the portfolio and participate in securities lending. Those differences can create small tracking effects, although both funds should remain very close to the S&P 500 before costs.
SPY's advantage is market liquidity. Its trading volume and options market are valuable to institutions and short-term traders who care about tight execution and deep derivatives. A long-term investor who buys periodically and rarely trades may place more weight on the lower fee.
The portfolio risk is identical
Choosing IVV instead of SPY does not reduce exposure to the largest S&P 500 companies. Both hold the index in the same weights, so concentration in mega-cap technology remains. The choice changes implementation cost and market mechanics, not the economic portfolio.
Fee savings also need context. A $64.50 annual difference on $100,000 is real, but taxes, bid-ask spreads and trading behavior can matter more in a specific account. Selling an appreciated SPY position merely to switch funds could trigger a capital-gains bill that overwhelms years of fee savings.
For new long-term money, the lower expense ratio gives IVV a straightforward advantage. For frequent trading or options strategies, SPY's liquidity may justify the higher fee. The better fund depends less on past performance charts than on how the investor plans to use it.