Best S&P 500 ETFs to Watch in 2025

Below, we’ll examine a selection of popular and well-regarded S&P 500 ETFs, highlighting their key characteristics to help you make informed investment decisions. We will consider factors such as expense ratios, top holdings, and reasons to consider each ETF.

• Expense Ratio: 0.0945%
• Top Holdings: Apple Inc., Microsoft Corp., Amazon.com Inc., NVIDIA Corporation, Alphabet Inc. (Class A & C Shares), Meta Platforms Inc., Berkshire Hathaway Inc. (Class B Shares), JPMorgan Chase & Co., and UnitedHealth Group Incorporated.
• Why Consider It? SPY is the oldest and one of the most liquid S&P 500 ETFs available. Its immense trading volume and tight bid-ask spreads make it ideal for both short-term and long-term investors. The ETF is widely tracked and serves as a benchmark for the S&P 500 index itself. It’s a core holding for many portfolios due to its simplicity and low cost.

• Expense Ratio: 0.04%
• Top Holdings: Apple Inc., Microsoft Corp., Amazon.com Inc., NVIDIA Corporation, Alphabet Inc. (Class A & C Shares), Meta Platforms Inc., Berkshire Hathaway Inc. (Class B Shares), JPMorgan Chase & Co., and UnitedHealth Group Incorporated.
• Why Consider It? IVV is known for its incredibly low expense ratio, making it a cost-effective choice for investors seeking broad market exposure. It offers nearly identical performance to SPY but at a fraction of the cost. IVV is a solid choice for long-term, buy-and-hold investors looking to minimize fees.

• Expense Ratio: 0.03%
• Top Holdings: Apple Inc., Microsoft Corp., Amazon.com Inc., NVIDIA Corporation, Alphabet Inc. (Class A & C Shares), Meta Platforms Inc., Berkshire Hathaway Inc. (Class B Shares), JPMorgan Chase & Co., and UnitedHealth Group Incorporated.
• Why Consider It? Similar to IVV, VOO also boasts an extremely low expense ratio, making it another attractive option for cost-conscious investors. As a Vanguard product, it aligns with the company’s commitment to offering low-cost investment solutions. VOO is a good fit for investors who prefer Vanguard’s investment philosophy and product offerings.

• Expense Ratio: 0.03%
• Top Holdings: Unlike market-cap weighted ETFs, RSP holds all 500 companies in the S&P 500 with approximately equal allocations.
• Why Consider It? RSP offers a unique approach to S&P 500 investing by equally weighting each company in the index. This diversifies away from the dominance of the largest companies and can potentially lead to better performance over the long term, especially during periods when smaller companies outperform. However, it comes with a slightly higher expense ratio compared to market-cap weighted ETFs.

• Expense Ratio: 0.35%
• Top Holdings: Target, Walmart, Coca-Cola, and Johnson & Johnson
• Why Consider It? NOBL provides exposure to high-quality, dividend-paying companies with a proven track record of increasing dividends annually. This focus on dividend growth can offer a combination of income and potential capital appreciation. It’s attractive to investors seeking stable returns and a hedge against market volatility. While the expense ratio is higher than typical S&P 500 ETFs, the focus on dividend aristocrats can provide a differentiated investment strategy. It’s especially suitable for income-oriented investors who value consistent dividend growth.

Discover the capabilities of InvestingPro for evaluating S&P 500 ETFs. Access in-depth analysis of S&P 500 ETFs, easily compare expense ratios, 1-year, and 5-year returns:

Investing in S&P 500 ETFs is generally considered a sound strategy for investors seeking broad market exposure, diversification, and relatively low risk. However, it’s crucial to assess your financial goals, risk tolerance, and time horizon before investing.

• Diversification: Instant exposure to 500 of the largest U.S. companies across various sectors, reducing single-stock risk.
• Low Cost: Generally lower expense ratios compared to actively managed funds. Some options have incredibly low fees.
• Simplicity: Easy to understand and invest in. Tracks a well-known and widely followed market index.
• Liquidity: Typically high trading volumes, making it easy to buy and sell shares.
• Long-Term Growth Potential: Historically, the S&P 500 has delivered strong long-term returns, reflecting the overall growth of the U.S. economy.
• Passive Investing: Requires minimal active management, making it a hands-off investment strategy.

• Market Risk: Your investment’s value can decline during market downturns. S&P 500 ETFs are not immune to broad market declines.
• Concentration Risk: While diversified, the S&P 500 can be heavily influenced by a few large companies, particularly in technology. The ETF’s performance can be disproportionately affected by the performance of these giants.
• Lack of Outperformance: Because S&P 500 ETFs are designed to match the market, they won’t significantly outperform it. If you’re seeking higher returns, you might need to consider other investment strategies (with potentially higher risks).

Choosing the right S&P 500 ETF requires careful analysis and consideration of several factors. Here are some essential steps to help you find the top S&P 500 ETFs for your investment needs:

1. Analyze Holdings

Review the top holdings of the ETF to understand its exposure to different sectors and companies. This will give you insights into the ETF’s potential performance drivers and risk factors. Market-cap weighted ETFs, like SPY, IVV and VOO, tend to be heavily weighted towards the largest companies in the S&P 500. Alternatives, such as RSP, distribute this weight across a broader range of constituents.

2. Check Expense Ratios

Lower expense ratios mean more of your money stays invested. Compare costs across different S&P 500 ETFs, balancing fees with fund performance. Use InvestingPro to assess and compare expense ratios, ensuring you choose a cost-effective option.

3. Review Performance and Liquidity

Historical performance isn’t a guarantee of future returns, but it provides insights into how the ETF reacts to market conditions. Ensure the ETF has sufficient trading volume for easy buying and selling. Within InvestingPro you can find and compare the performance across ETF benchmarks.

4. Understand the Theme

Consider whether you prefer a market-cap weighted ETF (SPY, IVV, VOO) or an equal-weighted ETF (RSP). Understand how the ETF’s investment strategy aligns with your overall investment goals and risk tolerance. Choose one that aligns with your investment thesis and risk tolerance.

An S&P 500 ETF is an exchange-traded fund that tracks the performance of the Standard & Poor’s 500 index, providing investors with diversified exposure to 500 of the largest publicly traded companies in the U.S.

Benefits include diversification, low expense ratios, liquidity, and ease of trading. They offer a convenient way to participate in the overall performance of the U.S. stock market.

Market risk is the primary risk, as the ETF’s performance is tied to the overall performance of the S&P 500 index. Economic downturns, geopolitical events, and changes in investor sentiment can impact ETF values.

Consider factors such as expense ratio, trading volume, tracking error, and the underlying index methodology. Compare different ETFs and align your choice with your investment goals and risk tolerance.

Open a brokerage account, research different S&P 500 ETFs, and place a buy order through your brokerage platform. Regularly monitor your investment and rebalance your portfolio as needed.