Wealthy PotIVV vs SPY: Same Index, Two Different Legal Wrappers
IVV and SPY track the identical index and hold the identical 504 stocks, but they are not the same kind of fund. SPY is a unit investment trust. IVV is an ordinary open-end fund. That single legal difference bars SPY from reinvesting its dividends, from lending its shares and from holding anything but the index, and it shows up in the numbers: over the ten years to 30 June 2026, IVV trailed the S&P 500 by 0.03 percentage points a year and SPY trailed it by 0.16. For a long-term holder, IVV. For an active trader, SPY still has the tighter spread.
Table of Contents
The Short Answer
- Buying and holding? IVV. It charges 0.03% against SPY's 0.0945%, and it has tracked the index roughly 0.11 to 0.12 percentage points a year closer over every period both issuers publish.
- Trading or writing options? SPY. Its 30-day median bid-ask spread is published as 0.00%, below the rounding floor, and it is cross-listed in Singapore, Tokyo and Australia.
- The reason is structural, not managerial. SPY's prospectus says the trust "is not authorized to" lend its securities, use derivatives, or hold anything outside the index. IVV's prospectus says it may lend up to one-third of total assets and may use derivatives to track the index better.
- SPY cannot reinvest a dividend it receives. Cash goes into what its prospectus calls a "non-interest-bearing account" and waits for the quarterly distribution, which is paid at the end of the month after the ex-date.
- IVV is now the larger fund. $888.4bn as of 25 September 2026 against SPY's $818.7bn as of 24 September 2026.
- The fee gap is 6.45 basis points. The performance gap is about 11 to 12. The rest is what the wrapper costs.
- Both own the same companies in the same weights. Nobody is choosing a different portfolio here.
The Difference That Is Not on the Fact Sheet
Nearly every comparison of these two funds stops at the expense ratio. That misses the more interesting fact, which sits in the first page of each prospectus.
SPY is a unit investment trust. Its own filing puts it plainly: "SPDR S&P 500 ETF Trust (the 'Trust') is a unit investment trust created under the laws of the State of New York and registered under the Investment Company Act of 1940, as amended." It has no board, no investment adviser making decisions, and a fixed termination date written into the trust agreement: 22 January 2118, or twenty years after the death of the last survivor of eleven named people, whichever comes first.
IVV is an open-end fund. Its statement of additional information says iShares Trust "is an open-end management investment company registered with the SEC under the 1940 Act," organised as a Delaware statutory trust in December 1999, with BlackRock Fund Advisors as investment adviser.
One clarification, because it is repeated wrongly across the internet: SPY is registered under the 1940 Act. It is a unit investment trust within that Act, not a fund operating outside it. The restrictions below come from the trust's own governing documents, not from an absence of regulation.
Here is the sentence from SPY's prospectus that does the work. Under "Investment Restrictions":
"The Trust is not actively managed and only holds constituent securities of the Index regardless of the current or projected performance of a specific security or a particular industry or market sector. Therefore, the Trust is not authorized to invest in the securities of registered investment companies or any other registered or unregistered funds, lend its portfolio securities or other assets, issue senior securities or borrow money for the purpose of investing in securities, purchase securities on margin, sell securities short or invest in derivative instruments, including, without limitation, futures contracts, options or swaps."
Three prohibitions in one sentence, and each one has a price. No lending means no lending revenue. No derivatives means no futures overlay to keep incoming cash invested. No deviation from the index means no flexibility around index changes. IVV is permitted all three, and its prospectus says so directly: it "may lend securities representing up to one-third of the value of the Fund's total assets" and "may use derivatives to gain or reduce exposure to the components of the Underlying Index."
IVV vs SPY Side by Side
| IVV | SPY | |
|---|---|---|
| Full name | iShares Core S&P 500 ETF | State Street SPDR S&P 500 ETF Trust |
| Legal structure | Open-end management investment company (series of iShares Trust, Delaware) | Unit investment trust (New York), registered under the 1940 Act |
| Adviser or trustee | BlackRock Fund Advisors | Trustee: State Street Global Advisors Trust Company. Sponsor: PDR Services, LLC, a subsidiary of Intercontinental Exchange |
| Inception | 15 May 2000 | 22 January 1993 |
| Expense ratio | 0.03% | 0.0945% |
| Net assets | $888,433,614,629 (25 Sep 2026) | $818,687.28M (24 Sep 2026) |
| Holdings | 504 | 504 |
| Index | S&P 500 | S&P 500 |
| Replication | Representative sampling; may hold fewer than all components | Holds as many index securities "as is practicable" |
| Can lend securities? | Yes, up to one-third of total assets | No |
| Can use derivatives? | Yes, to track the index | No |
| Dividends | Quarterly | Quarterly, ex-date the third Friday of Mar/Jun/Sep/Dec, paid the last business day of the following month |
| 30-day median bid-ask spread | 0.01% (25 Sep 2026) | 0.00% (24 Sep 2026) |
| Also listed on | NYSE Arca | NYSE Arca, plus Singapore (S27), Tokyo (1557) and the Australian Securities Exchange |
Notice what is not different. Same index, same 504 holdings, same top ten in the same order, same quarterly payment schedule, same in-kind creation mechanics that make both funds tax-efficient. At 30 June 2026 the two funds' top holdings matched to within 0.01 of a percentage point on every name.
Notice also that IVV is now the bigger fund. SPY was first to market by seven years and spent decades as the largest ETF in the world. It is no longer the largest by assets, although it remains the most heavily traded.
What a UIT Cannot Do With Your Dividends
This is the part most people have heard about and almost nobody has checked. Here is what SPY's prospectus actually says:
"Dividends payable to the Trust in respect of Portfolio Securities are credited by the Trustee to a non-interest-bearing account as of the date on which the Trust receives such dividends. ... All funds collected or received are held by the Trustee without interest until distributed in accordance with the provisions of the Trust Agreement. To the extent the amounts credited to the account generate interest income or an equivalent benefit to the Trustee, such interest income or benefit is used to reduce the Trustee's annual fee."
Read the last sentence twice. Any earnings on that idle cash go to reduce the trustee's fee. They are not reinvested into S&P 500 shares on your behalf, because the trust is not permitted to buy anything that is not an index purchase.
The same document adds, under a heading of its own: "No dividend reinvestment service is provided by the Trust." Your broker may run one for you in the secondary market, but the fund itself cannot.
How long does the money sit? Longer than most people assume. SPY's ex-dividend date is the third Friday of March, June, September and December, and the prospectus says "the payment of dividends is made on the last Business Day in the calendar month following each Ex-Dividend Date." So a dividend that lands in the trust just after a December ex-date is held through the whole quarter and paid at the end of April. That is roughly four months of cash earning nothing for unitholders while the market moves.
The prospectus confirms the lag with a date. Its performance footnote explains that the last distribution of 2025 had an ex-date of 19 December 2025, and that the actual reinvestment price was the NAV on 30 January 2026.
You can also see the cash on the balance sheet. At the trust's fiscal year end on 30 September 2025:
| SPY balance sheet line | Amount | Share of net assets |
|---|---|---|
| Total investments | $680,219,847,000 | 100.0% |
| Cash | $1,762,619,902 | 0.259% |
| Dividends receivable | $279,819,458 | 0.041% |
| Distribution payable | $1,818,263,454 | 0.267% |
| Net assets | $680,289,277,221 |
The cash balance and the pending distribution are almost exactly the same size, which is the structure working as designed: collect, hold, pay out. Neither issuer publishes a figure converting that into a return drag, and we are not going to invent one. What we can do is measure the total gap against the index, which is the next section.
The Revenue SPY Is Not Allowed to Earn
An open-end fund can lend its shares to short sellers and collect a fee. SPY cannot, because its trust agreement forbids it. IVV can, and its statement of additional information reports exactly what it earned.
| IVV securities lending, fiscal year ended 31 March 2026 | Amount |
|---|---|
| Gross income from securities lending activities | $115,892,624 |
| Rebates paid to borrowers | $94,579,636 |
| Paid to BlackRock Institutional Trust Company as lending agent | $3,827,005 |
| Cash collateral management expenses | $975,642 |
| Net income from securities lending | $16,510,341 |
| Fund net assets at 31 March 2026 | $720,151,759,000 |
| Net lending income as a share of net assets | about 0.0023%, roughly a quarter of a basis point |
Be honest about what this shows. Securities lending is a real advantage that SPY is legally barred from having, and it is also small. A quarter of a basis point does not explain a twelve-basis-point performance gap. Large-cap US shares are abundant and cheap to borrow, so the lending market pays very little for them. Anyone telling you securities lending is why SPY lags is overstating a rounding error.
The fee is the bigger factor. The structure adds to it. Neither issuer breaks down how much of the residual belongs to cash, to lending, or to the different replication methods, so neither will we.
What It Costs, Measured Against the Index
The cleanest way to price a wrapper is to compare each fund with the index it tracks, using each issuer's own published numbers, on the same date. Both fact sheets are dated 30 June 2026.
| Annualized, as of 30 June 2026 | 1 year | 3 years | 5 years | 10 years |
|---|---|---|---|---|
| IVV, NAV total return | 22.29% | 20.58% | 13.37% | 15.47% |
| IVV's stated benchmark | 22.32% | 20.59% | 13.40% | 15.50% |
| IVV shortfall vs index | 0.03 | 0.01 | 0.03 | 0.03 |
| SPY, NAV total return | 22.15% | 20.46% | 13.26% | 15.35% |
| SPY's stated index | 22.32% | 20.61% | 13.41% | 15.51% |
| SPY shortfall vs index | 0.17 | 0.15 | 0.15 | 0.16 |
| IVV minus SPY | +0.14 | +0.12 | +0.11 | +0.12 |
Now check it against a completely different date. Both prospectuses report average annual total returns for the periods ended 31 December 2025, and both quote the identical index line.
| Average annual total return, periods ended 31 Dec 2025 | 1 year | 5 years | 10 years |
|---|---|---|---|
| IVV, before taxes | 17.85% | 14.39% | 14.78% |
| SPY, before taxes | 17.73% | 14.28% | 14.66% |
| S&P 500 (both filings quote this identically) | 17.88% | 14.42% | 14.82% |
| IVV, after taxes on distributions | 17.48% | 14.00% | 14.31% |
| SPY, after taxes on distributions | 17.41% | 13.91% | 14.21% |
| IVV minus SPY, before taxes | +0.12 | +0.11 | +0.12 |
Two different measurement dates, two different sets of documents, the same answer: IVV has beaten SPY by about 0.11 to 0.12 percentage points a year.
That number is the point of this page. The expense ratio gap is 0.0645 percentage points. The performance gap is close to double it. Somewhere between five and six basis points a year is what the unit investment trust wrapper costs on top of the fee, and it is consistent across every period either issuer publishes.
What that compounds to, for context:
| Hypothetical $10,000 held for 10 years | Ending value |
|---|---|
| At SPY's 10-year NAV return (15.35%) | $41,704 |
| At IVV's 10-year NAV return (15.47%) | $42,140 |
| At the index return (15.50%) | $42,249 |
| Difference, IVV over SPY | about $436 |
This is educational information, not personalized investment advice. Past performance does not guarantee future results, all investing carries the risk of loss, and the figures above are backward-looking arithmetic rather than a projection. Verify current figures with each issuer and consider speaking with a licensed advisor before acting.
Want to run the same maths on your own contribution schedule? Use the compound interest calculator.
What SPY Is Genuinely Better At
None of the above makes SPY a bad fund. It makes SPY a fund built for a different job.
The spread. Both issuers publish a 30-day median bid-ask spread computed the same way, from the national best bid and offer sampled every ten seconds across the last 30 calendar days. SPY's prints as 0.00%, IVV's as 0.01%. Both are effectively at the two-decimal rounding floor, so the honest reading is that SPY sits at or below it while IVV rounds up to a single basis point. On a round trip that difference is a rounding error for someone investing monthly, and it is real money for someone trading size several times a day.
The reach. SPY's prospectus records that units "are also listed and traded on the Singapore Exchange Securities Trading Limited (stock code S27), the Tokyo Stock Exchange (code 1557) and the Australian Securities Exchange." IVV's US listing is NYSE Arca. For an investor outside the US, or a desk trading across time zones, that matters.
The options market. SPY carries the deepest listed options market of any ETF, which is why covered-call writers, hedgers and spread traders default to it. We could not find a primary source publishing comparable open-interest figures for the two funds, so treat this as a qualitative point rather than a measured one.
The history. State Street's own page notes that SPY, "launched in January 1993, was the very first exchange traded fund listed in the United States." Thirty-three years of continuous trading history is itself useful to anyone backtesting.
Which One Fits You
Choose IVV if this is retirement money, a core holding, or anything you expect to own for more than a couple of years. Lower fee, closer tracking, the ability to lend and to use derivatives for tracking, and no cash sitting idle between distributions. On the evidence both issuers publish, it is the better wrapper for a holder.
Choose SPY if you trade actively, write options, run short holding periods, or need the international listings. Execution quality then matters more than an annual fee you pay in slivers.
Already own SPY in a taxable account? Do not switch on autopilot. Selling is a taxable event, and a long-held SPY position probably carries a large unrealised gain. Recovering roughly 0.12 percentage points a year can take a long time to outweigh a capital gains bill today, depending on your 2026 tax bracket and how long you plan to hold. Inside an IRA or a 401(k) there is no such friction, and the switch costs you a spread and nothing else.
A cheaper option exists for direct contributions. If you are simply choosing where new money goes, Vanguard's VOO also charges 0.03% and is also an open-end fund. We compare it with IVV in IVV vs VOO and with SPY in SPY vs VOO. If you are still deciding between the S&P 500 and the whole US market, start with VTI vs VOO, and for the broader question of whether an index fund suits you at all, see should you invest in the S&P 500?
Sources & Methodology
Every figure on this page was read from the issuer's own document or the index provider, not from a secondary summary or another comparison site.
- SPDR S&P 500 ETF Trust, Form 485BPOS filed 26 January 2026: the unit investment trust description, the investment restrictions, the non-interest-bearing dividend account, the dividend timetable, the 0.0945% expense accrual and its component breakdown, the average annual total returns to 31 December 2025, and the audited Statement of Assets and Liabilities at 30 September 2025.
- iShares Trust, Form 485BPOS filed 27 July 2026: the open-end registration, the 0.03% fee table, the securities lending and derivatives permissions, the representative sampling description, the securities lending income table for the year to 31 March 2026, the financial highlights, and the average annual total returns to 31 December 2025.
- State Street, SPY fund page: assets under management, gross expense ratio, 30-day median bid-ask spread and premium/discount history.
- SPY Fact Sheet, 30 June 2026: inception date, holdings count, 30-day SEC yield and the NAV, market value and index returns.
- iShares, IVV fund page: net assets, expense ratio, 30-day median bid-ask spread, inception date and standard deviation.
- IVV Fact Sheet, 30 June 2026: net assets, fee breakdown, calendar-year returns and the annualized NAV, market price and benchmark returns.
- S&P Dow Jones Indices, S&P 500: the index definition, its 4 March 1957 launch date, and its coverage of "approximately 80% of available market capitalization."
What we could not verify, stated rather than guessed. Neither issuer publishes consolidated average daily trading volume in a comparable form: State Street publishes primary-exchange volume for the previous business day only, and iShares does not define its volume figure, so we have not compared them and have not quoted a consolidated number. We found no primary source for options open interest by fund. Neither issuer attributes any part of its tracking shortfall to cash drag, lending or replication method, so our five-to-six-basis-point residual is the arithmetic difference between the performance gap and the fee gap and is not an attribution. SPY's trustee fee waiver runs only to 1 February 2027, after which the prospectus says the trustee "may discontinue this voluntary waiver policy," so SPY's expense ratio should be re-checked after that date.
This article is for general education and is not investment, tax or legal advice. Fund data changes daily, index returns are unmanaged and cannot be invested in directly, and past performance does not guarantee future results. All investing carries the risk of loss. Check current figures with the issuer and consider speaking with a licensed financial professional before making a decision.
FAQ: IVV vs SPY
Is IVV better than SPY?
For a long-term holder, on the published evidence, yes. IVV charges 0.03% against SPY's 0.0945% and has tracked the S&P 500 about 0.11 to 0.12 percentage points a year closer over one, three, five and ten years. For an active trader, SPY's tighter spread and deeper options market can outweigh that.
What is the difference between IVV and SPY?
They track the same index and hold the same 504 stocks. The difference is legal: SPY is a unit investment trust and IVV is an open-end fund. SPY is therefore barred from lending securities, using derivatives and reinvesting its dividends internally, and it costs more than three times as much to own.
Why is SPY more expensive than IVV?
SPY's 0.0945% breaks down in the prospectus as a trustee's fee of 0.0492%, an S&P licence fee of 0.0301%, marketing of 0.0132% and other operating expenses of 0.0020%. Changing a unit investment trust's fee schedule is harder than changing an open-end fund's, and SPY has never matched the price war that pushed rivals to 0.03%.
Do IVV and SPY hold the same stocks?
Effectively yes. Both held 504 positions at 30 June 2026 and their top ten holdings matched to within 0.01 of a percentage point on every name. IVV uses representative sampling and may not hold every component; SPY holds as many as is practicable. In either case you own the same companies in the same weights.
Is SPY a UIT, and why does that matter?
Yes, SPY is a unit investment trust organised under New York law and registered under the Investment Company Act of 1940. It matters because the trust agreement bars three things an ordinary fund can do: lend portfolio securities, use derivatives, and hold anything outside the index. The dividend cash that results has to wait in a non-interest-bearing account until the quarterly distribution.
Does SPY really lose money to cash drag?
It gives up whatever those dividends would have earned had they been reinvested immediately, which in a rising market is a real cost. Neither issuer publishes a number for it. What we can measure is the total shortfall: SPY trailed the index by 0.16 percentage points a year over ten years while IVV trailed by 0.03, and only 0.0645 of that difference is explained by the fee.
Should I switch from SPY to IVV?
In a tax-advantaged account, the switch costs only a spread and is easy to justify. In a taxable account, selling a long-held SPY position realises a capital gain, and recovering about 0.12 percentage points a year can take many years to outweigh the tax bill. Redirecting new contributions to IVV instead is the low-friction version of the same idea.
Which is bigger, IVV or SPY?
IVV, by assets. It held $888.4bn as of 25 September 2026 against SPY's $818.7bn as of 24 September 2026. SPY remains the older fund and the more actively traded one, with the tighter published bid-ask spread and listings in Singapore, Tokyo and Australia.
Which is better for a Roth IRA, IVV or SPY?
IVV, for the same reason it wins generally: lower fee and closer tracking over a long holding period. There is no tax reason to prefer either one inside a Roth, since both are already tax-efficient and distributions inside the account are not taxed. If you are already holding SPY in a Roth, switching has no tax cost.
Cite This Page
Journalists, educators and bloggers are welcome to cite this comparison. Please link back so readers can reach the underlying filings.
"IVV vs SPY: Same Index, Two Different Legal Wrappers." Wealthy Pot, 2026. https://wealthypot.com/ivv-vs-spy/
Related comparisons: IVV vs VOO · SPY vs VOO · SPY vs QQQ · SPLG vs VOO · VTI vs VOO · What is an ETF? · All ETF comparisons
