VOO
The Vanguard S&P 500 ETF (VOO) is an exchange-traded fund that seeks to track the investment performance of the S&P 500 Index, a widely regarded benchmark comprising 500 leading large-capitalization U.S. companies and covering approximately 80% of the available U.S. market capitalization.[1][2] Launched on September 7, 2010, by The Vanguard Group, VOO provides investors with broad exposure to the U.S. equity market through a passive indexing approach.[2] VOO employs a full-replication strategy, holding all stocks in the S&P 500 Index in the same capitalization-weighted proportions as the benchmark, which results in tight tracking of the index's returns.[2] The fund is traded on the NYSE Arca exchange under the ticker symbol VOO and is an exchange-traded share class of the broader Vanguard 500 Index Fund.[3] As of October 31, 2025, VOO has assets under management of approximately $800.2 billion and consists of 504 holdings, reflecting the index's composition across various sectors.[2] Managed by Vanguard's Equity Index Group—currently led by portfolio managers Michelle Louie, Nick Birkett, and Aurelie Denis—VOO features an ultralow expense ratio of 0.03%, enabling cost-efficient long-term investment in large-cap U.S. stocks.[2] The ETF distributes dividends quarterly, with a yield of 1.15% as of September 30, 2025, and is subject to risks associated with stock market volatility, sector concentration, and index tracking.[2] Known for its high liquidity and minimal tracking error, VOO serves as a core holding for many diversified portfolios seeking benchmark-like performance.[3]Overview
Background and Launch
The Vanguard S&P 500 ETF (VOO) was launched on September 7, 2010, by The Vanguard Group, Inc., a leading investment management firm based in Malvern, Pennsylvania.[4][5] This ETF was created to offer investors a cost-effective way to gain exposure to the S&P 500 Index, which tracks the performance of 500 large-capitalization U.S. companies, building on Vanguard's long history of index investing that began with its S&P 500 mutual fund in 1976.[5] At inception, VOO featured an expense ratio of 0.06%, significantly lower than competitors like the SPDR S&P 500 ETF Trust (SPY) at 0.09%, aiming to attract long-term investors prioritizing efficiency and minimal fees over active management.[5][6] VOO was listed for trading on the NYSE Arca exchange starting September 9, 2010, providing intraday liquidity and ease of access for retail and institutional investors.[5] As an open-end investment company, it complies with the regulatory requirements of the Investment Company Act of 1940, enabling the creation and redemption of shares through authorized participants to maintain close alignment with the underlying index while minimizing tracking error and tax inefficiencies.[4][7] Following its launch, VOO saw substantial inflows driven by its low costs and Vanguard's reputation, rapidly expanding its assets under management to become one of the world's largest ETFs. By late 2025, its AUM exceeded $800 billion, marking it as the first ETF to achieve this scale and underscoring its appeal as a core holding for passive investment strategies.[8][9]Key Characteristics
The Vanguard S&P 500 ETF (VOO) trades under the ticker symbol VOO on the NYSE Arca exchange, with the CUSIP identifier 922908363 and the ISIN US9229083632.[4][10][11] As an open-end exchange-traded fund, VOO operates without a fixed limit on authorized shares, enabling ongoing issuance and redemption to meet investor demand. Authorized participants create or redeem shares in creation units of 25,000 shares each, typically exchanging baskets of securities representing the fund's portfolio rather than cash.[12][7] VOO follows a dividend policy of quarterly distributions, paid in March, June, September, and December, derived from dividends received on its underlying S&P 500 stocks. Investors may elect to reinvest these dividends automatically through Vanguard's no-fee dividend reinvestment program, purchasing additional shares to compound returns.[13][14] The ETF's structure enhances tax efficiency through in-kind redemptions, where authorized participants exchange securities for ETF shares instead of cash, allowing the fund to avoid realizing capital gains and minimizing taxable distributions to shareholders.[15][16] As of October 31, 2025, VOO manages approximately $800.2 billion in assets under management. Over the past 52 weeks, its share price has ranged from a low of $442.80 to a high of $634.13, with average daily trading volume around 7.36 million shares.[2][17][18]Investment Strategy
Index Tracking Methodology
The Vanguard S&P 500 ETF (VOO) employs a full replication strategy to track the S&P 500 Index, holding all the constituent stocks in proportions that mirror their capitalization weightings within the index.[13] This approach ensures that the ETF's portfolio composition aligns precisely with the benchmark, minimizing deviations through direct ownership of each security rather than sampling or derivatives.[13] VOO adjusts its holdings quarterly to reflect changes in the S&P 500 Index, with rebalancing effective after the close on the third Friday of March, June, September, and December.[19] Additionally, ad-hoc adjustments occur for corporate actions such as mergers, where acquired companies are removed from the portfolio at the close of the last trading day or upon tender offer expiration, and spin-offs are evaluated for inclusion based on when-issued prices if applicable.[19] Tracking error for VOO is defined as the annualized standard deviation of the difference between the ETF's returns and the S&P 500 Index returns, arising from factors including operating expenses, transaction costs, cash drag, and timing discrepancies in rebalancing.[13] Historically, VOO has maintained a low tracking error, averaging 0.02% annualized over the past 10 years, which is well below 0.05% and reflects the efficiency of its full replication and low-cost structure.[20] The net asset value (NAV) of VOO is calculated daily at the close of regular trading on the New York Stock Exchange, typically 4:00 p.m. Eastern Time, by dividing the total market value of the portfolio's holdings (using closing prices) minus liabilities by the number of outstanding shares.[13] Fair-value pricing is applied if market quotations are unavailable or deemed unreliable, ensuring accurate representation of the underlying assets.[13]Replication Approach
The Vanguard S&P 500 ETF (VOO) employs a physical replication strategy, directly purchasing and holding all or substantially all of the stocks comprising the S&P 500 Index in proportions that approximate the index's market capitalization weighting, rather than using derivatives or sampling techniques.[13] This full-replication approach ensures that the fund maintains direct ownership of the underlying securities, providing investors with exposure to the actual assets in the index without intermediary financial instruments.[2] VOO's shares are created and redeemed through an in-kind process involving authorized participants (APs), which are typically large financial institutions such as broker-dealers. APs assemble and deliver a creation basket—a predefined set of securities closely mirroring the fund's holdings—to the ETF issuer in exchange for a large block of ETF shares known as a creation unit, usually comprising 50,000 to 250,000 shares; conversely, APs can redeem ETF shares for the underlying basket of securities.[13] This mechanism facilitates arbitrage opportunities, allowing APs to profit from any discrepancies between the ETF's market price and its net asset value (NAV), thereby helping to keep the share price aligned with the value of the underlying portfolio.[3] To enhance returns and offset costs, VOO participates in Vanguard's securities lending program, where the fund lends out portfolio securities to third parties, such as short sellers, in exchange for collateral typically exceeding the loaned value. The program generates additional income through lending fees and earnings on the collateral, with Vanguard returning approximately 95% of gross securities lending revenue to the fund in 2024, contributing an average of 1 to 5 basis points to annual returns across its funds and ETFs.[21] For equity funds like VOO, this income has historically offset between 23% and 90% of the expense ratio on average, with examples around 20% for similar S&P 500-tracking vehicles.[22] The fund's assets are held in custody by JPMorgan Chase Bank, N.A., which provides safekeeping, settlement, and administrative services to ensure the secure management and accurate valuation of the physical securities portfolio.[7] This custodial arrangement supports the fund's operational integrity, including the handling of dividends, corporate actions, and transfers during the creation and redemption processes.Portfolio Composition
Top Holdings
The Vanguard S&P 500 ETF (VOO) allocates its portfolio according to the market capitalization weighting of the S&P 500 Index, emphasizing the largest U.S. companies and resulting in heavy exposure to technology leaders that have driven index growth since 2020.[23] This approach amplifies the influence of high-performing mega-cap stocks, such as those in artificial intelligence and cloud computing, while maintaining broad diversification across the index's 500 constituents. As of September 30, 2025, the top 10 holdings represented 40.3% of VOO's total net assets, illustrating notable concentration risk in a handful of dominant firms that could impact overall portfolio volatility if they underperform.[24] The weights in these holdings fluctuate with market conditions; for instance, NVIDIA's allocation surged from under 1% in early 2020 to over 8% by late 2025, propelled by its role in AI advancements.| Rank | Company Name | % of Total Net Assets |
|---|---|---|
| 1 | NVIDIA Corp. | 8.0% |
| 2 | Microsoft Corp. | 6.7% |
| 3 | Apple Inc. | 6.6% |
| 4 | Alphabet Inc. | 4.5% |
| 5 | Amazon.com Inc. | 3.7% |
| 6 | Meta Platforms Inc. | 2.8% |
| 7 | Broadcom Inc. | 2.7% |
| 8 | Tesla Inc. | 2.2% |
| 9 | Berkshire Hathaway Inc. | 1.6% |
| 10 | JPMorgan Chase & Co. | 1.5% |
Sector Allocation
The Vanguard S&P 500 ETF (VOO) allocates its holdings according to the sector composition of the S&P 500 Index, which classifies companies into 11 sectors under the Global Industry Classification Standard (GICS) developed by MSCI and S&P Dow Jones Indices.[25] This structure ensures broad exposure to the U.S. large-cap equity market, with weights determined by market capitalization. As of October 31, 2025, VOO's sector allocation reflects the dominance of growth-oriented sectors, particularly Information Technology, which accounts for over one-third of the portfolio. The following table summarizes the current weights:| Sector | Weight (%) |
|---|---|
| Information Technology | 36.12 |
| Financials | 12.86 |
| Consumer Discretionary | 10.53 |
| Communication Services | 10.08 |
| Health Care | 8.96 |
| Industrials | 8.13 |
| Consumer Staples | 4.68 |
| Energy | 2.79 |
| Utilities | 2.34 |
| Real Estate | 1.84 |
| Materials | 1.66 |
Performance Metrics
Historical Returns
The Vanguard S&P 500 ETF (VOO) has delivered strong historical returns since its inception on September 7, 2010, closely mirroring the performance of the S&P 500 index it tracks, net of its minimal fees. As of November 19, 2025, VOO's annualized total return since inception stands at 14.75%, reflecting the compounded growth of the underlying large-cap U.S. equities including reinvested dividends.[30] VOO's total returns incorporate dividend distributions, which have contributed meaningfully to overall performance; for instance, the 1-year total return as of November 17, 2025, was 15.10% based on net asset value (NAV), compared to a price return of 13.67% excluding dividends. Over longer horizons, these returns demonstrate the ETF's ability to capture the S&P 500's broad market gains. The following table summarizes key annualized total returns (NAV basis):| Period | VOO Annualized Return | S&P 500 Benchmark Return |
|---|---|---|
| 1-Year | 15.10% | 15.13% |
| 5-Year | 14.72% | 14.75% |
| 10-Year | 14.46% | 14.49% |
| Since Inception | 14.75% | 14.78% |