Best S&P 500 Index Funds: Costs, Tickers and How to Choose

What the S&P 500 actually is

The S&P 500 is an index of 500 large US companies chosen by a committee at S&P Dow Jones Indices. It launched in 1957 and covers about 80% of the value of the US stock market. To join, a company must be based in the US, be profitable, and trade in enough volume. The index is weighted by float-adjusted market value. Bigger companies count for more.

That weighting matters more than it used to. As of June 2026, information technology made up about 39% of the index, and the 10 largest holdings were roughly 38% to 40% of its total weight. An S&P 500 fund spreads your money over hundreds of companies, but a large share of your result depends on a handful of tech giants.

An S&P 500 fund also leaves out small and mid-sized US companies and all foreign stocks. Many investors pair it with other funds for that reason.

The main S&P 500 funds compared

Source: iShares (IVV); AAII (VFIAX, data as of Oct. 6, 2026); 247 Wall St (FXAIX, SPYM, SPY, VOO, 2026); The White Coat Investor (SWPPX). Cost column is our arithmetic. Checked October 2026.

A note on SPLG: State Street renamed its low-cost S&P 500 ETF from SPLG to SPYM on October 31, 2025. It is the same fund. If an older article or your account statement shows SPLG, that is why.

SPY is the oldest and most heavily traded S&P 500 ETF, and its deep options market is useful to active traders. For a buy-and-hold investor, though, it costs about three to six times as much a year as the cheapest alternatives for the same index.

Do the cost differences matter?

Barely, at these levels. On a $100,000 balance, the gap between FXAIX at 0.015% and VOO at 0.03% is $15 a year. Fund size, tracking and trading costs are similar across the big funds. Over the past decade, The White Coat Investor found FXAIX and SWPPX returned about 14.75% and 14.72% a year, nearly identical. Pick the fund that fits your account rather than chasing a fraction of a basis point.

You never see an expense ratio as a bill. The fund deducts it from its assets a little each day, so it shows up only as a slightly lower return than the index itself. That is why it is easy to overlook in a high-cost fund. The bigger risk is not choosing VOO over IVV. It is ending up in a fund that charges many times as much for the same 500 stocks.

ETF or mutual fund?

The same index comes in two wrappers, and each has practical trade-offs.

Choose an ETF if:

• You may switch brokers. VOO, IVV and SPYM trade at almost every US brokerage with no commission. FXAIX and SWPPX are designed for Fidelity and Schwab customers. Other brokers may charge a fee to buy them, and moving them can be awkward.
• The money is in a taxable account. Index mutual funds can pass taxable capital gains to shareholders in a way ETFs generally avoid. Vanguard is a partial exception: VOO is a share class of the same fund as VFIAX, so the two have the same tax treatment.
• You want to trade during the day. ETFs trade at market prices from open to close. Mutual funds price once a day after the close.

Choose a mutual fund if:

• You want automatic investing in exact dollar amounts. Mutual funds let you set "invest $200 every payday" with no rounding. Many brokers now offer fractional ETF shares and recurring buys, which narrows this gap.
• Your account is at the fund's own broker. FXAIX at Fidelity or SWPPX at Schwab costs nothing to buy and has no minimum.
• The account is tax-sheltered. In a 401(k) or IRA, the ETF tax edge does not apply.

Your 401(k) may offer an S&P 500 fund under a different name, often an institutional share class or a collective trust. Check the fund's expense ratio in your plan documents. Our 401(k) guide explains how to read your plan's fund list.

What returns can you expect?

Nobody can promise a return, but the long record gives useful context. Data compiled by NYU Stern professor Aswath Damodaran show the S&P 500, including dividends, returned about 10.0% a year on a simple average from 1928 through 2024, and about 9.7% a year compounded. Those figures are before inflation.

The path was rough. Of the 97 years in that data, 20 were negative. The worst, 1931, lost about 44%. Recent years have run well above average: about 26% in 2023, 25% in 2024, and about 17.4% in 2025 with dividends reinvested.

Three practical lessons follow:

• Time horizon matters. Money you need within a few years can fall a long way in a bad year. Keep near-term savings in an FDIC-insured high-yield savings account instead.
• Strong recent runs do not predict the next one. With the index more concentrated in a few large tech stocks than in the past, a sector downturn would hit an S&P 500 fund harder.
• Staying invested is the hard part. The average return is only earned by investors who hold through the down years.

Why index funds are hard to beat

S&P Dow Jones Indices tracks how actively managed funds perform against their benchmarks in its SPIVA reports. In 2025, 79% of active US large-cap stock funds underperformed the S&P 500. Over a 20-year period, 91.8% fell short. Higher fees are a big reason. An active fund charging 0.75% has to beat the index by that much every year just to match a 0.03% index fund.

How to buy an S&P 500 fund

1. Pick the account. If you have a 401(k) match, contribute enough to get it. Then consider an IRA. Our Roth vs traditional IRA guide explains the choice. Use a taxable brokerage account for money beyond that.
2. Pick the fund that fits the broker. At Fidelity, FXAIX or any ETF. At Schwab, SWPPX or any ETF. At Vanguard, VOO or VFIAX if you have $3,000. Elsewhere, an ETF such as VOO, IVV or SPYM.
3. Set up automatic purchases. Regular investing on a schedule removes the temptation to time the market.
4. Turn on dividend reinvestment unless you want the cash.
5. Decide what else you need. An S&P 500 fund covers large US companies only. You might add a total-market, international or bond fund depending on your goals.

New to investing? Start with how to invest in stocks, and compare platforms in our online broker guide.

Common mistakes

• Owning three S&P 500 funds and calling it diversified. VOO, IVV and FXAIX hold the same stocks.
• Overlapping with a total-market fund. A total US market fund already contains every S&P 500 stock. Holding both mainly adds to your large-cap weighting.
• Buying a high-cost "S&P 500" fund. Some share classes sold through advisers or in older 401(k) plans charge many times more for the same index. Check the expense ratio.
• Selling mutual funds to switch brokers in a taxable account. Selling can trigger capital gains tax. Ask whether the new broker can hold the fund, or transfer the shares in kind.

Frequently asked questions

Sources

• iShares – iShares Core S&P 500 ETF (IVV)
• AAII – Mutual fund summary report: VFIAX
• etf.com – VOO vs VFIAX comparison guide
• My Money Blog – Vanguard expense ratio drops (February 2025)
• 247 Wall St – There are two SPY ETFs now (Aug. 2026)
• 247 Wall St – Fidelity 500 Index Fund (FXAIX): what investors should know (Aug. 2026)
• 247 Wall St – VOO's 0.03% fee and cheaper competitors (July 2026)
• The White Coat Investor – SWPPX vs FXAIX
• S&P Dow Jones Indices – The 500: a brief look at an index icon
• S&P Dow Jones Indices – SPIVA U.S. Year-End 2025
• NYU Stern (Damodaran) – Historical returns on stocks, bonds and bills
• DQYDJ – 2025 S&P 500 return
• Crypto Briefing – Tech stocks' share of the S&P 500 (June 2026)

Rates, fees and terms change often. Figures were checked in October 2026; confirm current details with the provider before you apply.