Choosing the right S&P 500 ETF can be a game-changer. Although most index funds operate the same way there are several factors to consider when picking IVV or SPLG. So, what are the main differences between these two funds?
Both IVV and SPLG are large blend exchange-traded funds. They track the S&P 500 index and have an expense ratio of 0.03%. At 294.95 billion dollars, IVV has around 30 times more assets under management than SPLG. SPLG also has a much higher turnover than IVV at 11% vs. 5%.
In this post, I’ll go over the key differences between IVV and SPLG and highlight what to look out for before investing in either. We’ll talk about industry exposure, fund composition, risk metrics, and of course past performance. Let’s get started!
IVV vs. SPLG – Overview
What’s The Difference?
|Category||Large Blend||Large Blend|
IVV is a Large Blend ETF. Large blend funds typically have broad market exposure and do not cater to a specific industry. Since IVV includes the entire S&P 500 index it holds shares of all top 500 companies in the United States.
SPLG is a Large Blend ETF. SPLG follows the exact same index as IVV and thus also falls into the large blend category of funds.
IVV is issued by iShares. As a subsidiary of BlackRock, iShares is one of the largest and most trusted asset management companies in the world. They provide a large variety of financial products, including low-cost index funds.
SPLG is issued by SPDR State Street Global Advisors. SPDR has become particularly known for their low-cost index funds that tend to outperform competitor products on fees and performance.
Assets Under Management
IVV has 294.95B total assets under management. When it comes to the total assets under management, there are not many funds that can compete with IVV. In fact, there is only one: SPY is the single biggest ETF by market cap followed by IVV in second place.
SPLG has 10.72B total assets under management. Compared to IVV, SPLG appears almost negligible. However, even though SPLG only manages about one-thirtieth of the assets that IVV does it has managed to climb into the top 20 ETFs ranked by market cap.
IVV has a Year-to-date return of 19.99%. Every broad market index fund has had tremendous returns over the past year, due to the swift and strong post-pandemic bull market recovery. Returns of nearly 20% are surely the exception to the rule.
SPLG has a Year-to-date return of 20.01%. Either by sheer luck or efficient fund allocations, SPLG has managed to increase that return by 0.2% over the past 12 months. However, this difference in returns is likely simply due to trading irregularities and should not be relied upon for future returns.
IVV has a dividend yield of 1.28%. With stocks at all-time highs dividend yields are naturally on the lower end of the spectrum. Currently, an investment in IVV would yield 1.28% per year in dividends.
SPLG has a dividend yield of 1.33%. For SPLG that number is slightly different due to some technical factors, such as trading volume and stock asynchronicity. However, over time SPLG is expected to pay out the same amount of dividends that IVV does since both ETFs essentially hold the same stocks.
IVV has an expense ratio of 0.03%. An expense ratio of 0.03% is extremely competitive and puts IVV on the shortlist of low-cost funds next to well-established Vanguard ETFs such as VOO and VTI.
SPLG has an expense ratio of 0.03%. SPLG sports the same expense ratio as IVV and charges 0.03% p.a. This means that you would pay around $3 in fees on a $10,000 investment per year.
IVV has a turnover of 5.00%. As mentioned in the second paragraph, IVV has a very low turnover of 5%. This indicates that the fund is not traded much and is mostly held by long-term investors.
SPLG has a turnover of 11.00%. SPLG on the other hand has more than double the turnover rate of IVV. This can be due to the fact that SPDR’s funds are not available as widely as iShares’ thus forcing investors to switch fund issuers when switching brokers.
Next, we’ll have a look at what the funds are made up of and which industries they are exposed to most. As you probably guessed this makeup will be very similar (if not equal) to the S&P500 makeup as both funds hold the companies that comprise that index.
A whopping 85% of the total assets of IVV are made up of large-cap stocks and most big tech companies. Only 15% are left for mid-cap companies and small-cap stocks are not included in IVV at all.
For SPLG the story is precisely the same! A massive 85% goes to large-cap stocks with the biggest holdings being Apple and Microsoft and 15% are allocated to mid-cap companies. These stocks tend to be the least weighted in the index as it is weight by market cap.
When looking at industry exposure we tend to focus on diversifying our portfolio to mitigate industry-specific risks. Both funds IVV and SPLG are well-diversified across several sectors although both funds tend to be very tech-heavy.
For instance, IVV is exposed to the technology sector at around 25% or one-quarter of all holdings whereas basic materials and other more industrial sectors tend to make up much lower percentages.
The only other two sectors that could compete with tech stocks in the future appear to be financial services and healthcare.
For SPLG the picture looks very similar. The bulk of assets is made up of tech-related stocks and healthcare and financial services come in at places two and three.
Other common industries found in the fund are consumer cyclical goods companies and communication services.
IVV vs. SPLG – Analysis
Before moving on to the performance charts let’s have a quick look at some of the more important risk metrics such as drawdowns and volatility. As we might expect from the previous analysis these metrics will also look fairly similar for both funds with only minor differences:
|Arithmetic Mean (monthly)||$0.01||$0.01|
|Arithmetic Mean (annualized)||12.00%||11.98%|
|Geometric Mean (monthly)||0.86%||0.86%|
|Geometric Mean (annualized)||10.78%||10.77%|
|Downside Deviation (monthly)||2.87%||2.84%|
|US Market Correlation||1||0.99|
Volatility for IVV is 4.29% on a monthly basis and 14.85% annualized which is pretty much in line with the entire U.S. market performance. According to the current data, SPLG is slightly less volatile than IVV at 4.25% monthly and 14.72% annual volatility.
However, the slight differences in these metrics should not sway your opinion one way or the other.
When looking at the above chart of drawdowns over the past decade or so two things jump out first:
- Both funds IVV and SPLG experience nearly simultaneous drawdowns of equal or similar intensity.
- The only time that the funds did diverge was from 2010 to 2013 post-financial crisis.
However, since 2013 drawdowns have been nearly 100% correlated between SPLG and IVV.
IVV vs. SPLG – Performance
Now the moment you have been waiting for: which fund actually performed better in the backtest? The numbers below have been calculated using $10,000 as the starting portfolio balance, adding nothing as we go along over time.
Unsurprisingly, IVV and SPLG have very similar annual returns. The only difference I can spot is in 2006 when IVV outperformed SPLG by a few percentage points and the years 2009, 2013, and 2019 when SPLG had an overall better performance than IVV.
|Portfolio||Initial Balance||Final Balance||CAGR|
Given the numbers above we can surely conclude: IVV and SPLG perform about the same. There is no major difference in return between these two funds.
IVV has had a CAGR (compound annual growth rate) of 10.78% over the past 5 years and SPLG’s CAGR is 10.77%. A difference of 0.01%! This would have resulted in an additional $43 in the IVV portfolio compared to SPLG.
While the jury may still be out on some other fund comparisons, I can clearly state that there is no major difference between IVV and SPLG. If you want to invest in an S&P 500 ETF pick the one that is most readily available.
If you are looking at other funds be sure to always check the expense ratio as this can really eat into your profits. Here, both ETFs we compared have an extremely low fee structure of 0.03% annually which makes them ideal candidates for long-term investing.
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