What VOO actually is
VOO is Vanguard’s ETF for the S&P 500. It aims to replicate the index by holding all, or substantially all, of its stocks in about the same proportions as the index, so you own a slice of roughly 500 of the largest US companies.
Vanguard is known for its investor-owned structure and its focus on low costs, which has made it a favourite among long-term, buy-and-hold investors.
How it works
The fund simply tracks the index. When a company enters or leaves the S&P 500, the fund adjusts. There is no active decision-making, so turnover and costs are low.
In February 2025, VOO overtook SPY as the largest ETF in the world by assets, which shows how strongly investors have moved toward cheaper index funds.
Costs and distributions
Index funds like this typically charge far less than actively managed funds. Over decades, a low fee leaves more of the return in your pocket, so check the current expense ratio on Vanguard’s website.
VOO pays dividends quarterly, and the yield has typically been around one percent, because the largest companies in the index distribute only a small part of their profits. If you reinvest the payouts, they add to your share count and compound over time. Our DRIP calculator shows how.
What to keep in mind
- Heavy in a few companies. The largest holdings account for a big part of the fund’s value.
- Only the US. There is no international or small-company exposure.
- Market risk. It will fall when the market falls, sometimes by a lot.
Quick take
VOO is a simple core holding that many investors use as the foundation of a portfolio. It is not designed for high income, but its dividends grow as the companies it holds raise theirs.