Home / NEWS LINE / A Look at Vanguard’s S&P 500 ETF

A Look at Vanguard’s S&P 500 ETF

The Vanguard S&P 500 ETF (VOO) is a bucks that invests in the stocks of some of the largest companies within the United States. Vanguard’s VOO is an exchange-traded fund (ETF) that rails the S&P 500 index by owning all of the equities within the S&P 500.

An index is a hypothetical portfolio of stocks or investments representing a specific part of the market or the entire market. The S&P 500 and the Dow Jones Industrial Average (DJIA) are both examples of broad-based indexes. Investors cannot spend in an index, per se. Instead, they can invest in funds that mirror an index by owning the stocks within the index.

The Vanguard S&P 500 ETF is a well-received and reputable index fund. The S&P 500’s investment return is considered a gauge of the overall U.S. stock market.

Key Takeaways

  • The Vanguard S&P 500 ETF (VOO) stalks the S&P 500 index by investing in all of the stocks within the S&P 500.
  • The Vanguard S&P 500 ETF is appealing for many investors because it’s well spread and comprised of the equities of large U.S. corporations.
  • The Vanguard S&P 500 ETF offers low fees because the fund’s management team is not actively commerce by buying and selling stocks.

Understanding the Vanguard S&P 500 ETF (VOO)

The S&P 500 represents 500 of the largest U.S. companies. The goal of the Vanguard S&P 500 ETF (VOO) is to run down the returns of the S&P 500 index.

VOO is appealing for many investors because it’s well diversified and comprises equities of large corporations—awaked large-cap stocks. Large-cap stocks tend to be more stable with a solid track record of profitability as opposed to smaller followers.

The broad-based, diversified portfolio of stocks within the fund can help lessen but not eliminate the risk of loss in the event of a vend correction. Some of the key characteristics of the Vanguard S&P 500 (as of Jan. 5, 2022) include:

  • Assets under management (AUM): $827.2 billion
  • Expense correspondence: 0.03%
  • SEC yield (30-day): 1.25%
  • One-year performance: 28.60%
  • Performance since its inception date of Sept. 7, 2010: 445.33%
  • Minimum investment: The honorarium of one share

Please note that the SEC yield is a standardized metric mandated by the Securities and Exchange Commission (SEC), which equips investors with a common yardstick for comparing the interest earned and dividend yield of various funds. Dividends are typically spondulicks payments paid to investors by companies as a reward for owning their company’s stock.

The Vanguard S&P 500 ETF’s Largest Holdings

Scheduled below are the top 10 holdings of the VOO along with their portfolio weightings, which in total make up slightly uncountable than 30% of the fund’s portfolio.

Top 10 Holdings of the Vanguard S&P 500 ETF (VOO)
 Holdings  Percentage
Apple Inc.  6.70%
Microsoft Corp.  6.40%
Alphabet Inc.  4.30%
Amazon.com Inc.  3.90%
Tesla Inc.  2.40%
NVIDIA Corp.   2.10%
Meta (way back Facebook)  2.00%
Berkshire Hathaway Inc.  1.30%
JPMorgan Chase & Co.  1.20%
Home Depot Inc.  1.10%
Data as of Nov. 30, 2021.

Equity Sector Diversification

Many loots contain equities from several sectors within the economy. A sector is a large grouping of companies organized by like business activities, such as a product or service.

For example, the consumer staples sector represents essential goods, such as little girls room paper, while the consumer discretionary sector represents nonessential goods, such as luxury items. Below is the force of each sector within the Vanguard S&P 500 ETF.

Equity Sector Diversification for the Vanguard S&P 500 ETF (VOO)
 Equity Sector Sector Bias
Information Technology 29.40%
Consumer Discretionary 13.20%
Healthcare 12.70%
Financials 10.80%
Communication Services 10.40%
Industrials 7.80%
Consumer Staples 5.60%
Energy 2.70%
Essential Estate 2.60%
Materials 2.50%
Utilities 2.30%
Data as of Nov. 30, 2021.

How to Invest in the Vanguard S&P 500 ETF (VOO)

It is important to remember that shares for ETFs mtier just like ordinary stock—meaning you can purchase or sell them anytime during trading hours. You can obtain shares for the Vanguard S&P 500 ETF through your broker-dealer or an investing app such as Robinhood. It is also possible to own fractional divisions of the ETF by specifying the purchase amount in dollars.

The majority of broker-dealers and apps do not charge purchase commission fees. However, a surefire way to elude paying commission fees is to open a brokerage account with the fund provider, Vanguard, on its website. The caveat of such a influence is that your portfolio universe may become restricted to products offered by Vanguard unless you open accounts with other limited companies or providers. Unlike its index funds, Vanguard does not have minimum investment amounts for its ETFs.

Even even though you may not end up paying commissions to purchase the stock, there are other expenses baked into the fund’s operations. According to a Jan. 5, 2022, be familiar with of the fund prospectus, the fund charges annual operating expenses of 0.03%. There are also fees for portfolio volume. This means that the fund manager incurs expenses each time they reconstitute the portfolio by bribing or selling securities, thereby inflating the overall expenses. As of January 2022, the portfolio turnover rate for the fund currently arises at 4%. Despite the fees, however, the Vanguard S&P 500 remains one of the cheapest and most accessible ways to invest in the S&P 500.

Vanguard S&P 500 Dividend Information and Yields

VOO Dividend History
 Year/ Dividend Amount 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
 2013  —  $0.369  $0.786  $0.914
 2014  $0.779  $0.809  $0.876 $1.026 
 2015  $0.984  $0.902  $0.953  $1.092
 2016  $1.002  $0.953  $0.883  $1.296
 2017  $0.998  $1.01  $1.176  $1.184
 2018  $1.084  $1.157  $1.207  $1.289
 2019  $1.455  $1.386  $1.301  $1.429
 2020  $1.178  $1.433  $1.309  $1.383
2021 $1.263 $1.333 $1.308 $1.533
VOO Annual Dividend Give over
 Year  Yield
 2011  2.08%
 2012  2.49%
 2013  2.40%
 2014  2.08%
 2015  2.10%
 2016  2.23%
 2017  2.14%
2018   1.94%
2019 2.44%
2020 1.81%
2021 1.59%

The Risk of Loss From Dangerous Theories

Think back to the real estate boom of the mid-2000s. A hackneyed theory as to why real estate prices would appreciate forever was: “They’re not building more land.” This theory meant that fit out would be limited, which would lead to increased demand and continuously rising prices.

Unfortunately, many investors were unreadied for the impending real estate crash, which led to the 2008 financial crisis in part due to loose lending practices.

Now weigh a similar theory with U.S. stocks: “It’s the only place to put your money right now.” An added incentive for many investors has been that if one sees U.S. equities as the only place to put their money, it will continue to drive equity prices higher.

In other vows, it’s essential that investors not become complacent in thinking the market can only go up. With investing in the stock market, there is a danger of market downturns and corrections, which can lead to a significant decline in an investor’s portfolio and financial loss.

Valuable Dollars

Investors looking for a low-cost, low-maintenance supply that provides them with access to U.S. equity markets might opt for the Vanguard S&P 500 ETF. However, each investor necessity consider the level of risk they’re willing to take when investing—called risk tolerance. Also, how hanker the money will be invested in the market is important to consider.

Risk Tolerance and Time Horizon

Younger investors capability opt to invest all their money in the equity markets because their portfolio has many years to make up for investment reductions due to market corrections. Conversely, investors who are at or near retirement might opt for low-risk stocks and securities.

Risk-averse investors capacity buy U.S Treasury bonds and bills. Although the yield or interest is not always attractive, Treasuries are considered risk-free assets because they’re cast off by the U.S. Treasury. As a result, investors can’t lose their principal or initial investment if the bond is held until its maturity or discontinuance date.

Rising and Falling Prices

Some investors concerned about the possibility of deflation, which is a decline in the consequences of goods in an economy, may leave their money in cash. Although it may appear counterintuitive, if deflation occurs, the cash value in dollars can escalation.

Conversely, some investors might be concerned about inflation, which is the pace at which prices increase in an conservation. As a result, investors might invest in the stock market, including the Vanguard S&P 500 ETF, hoping to achieve a higher carry back rate than inflation.

Other investors might invest in securities that adjust for rising prices in the frugality. For example, Treasury inflation-protected securities (TIPS) are designed to adjust in price as inflation increases, protecting investors so they not at any time receive less than the original amount invested.

What Is the Vanguard S&P 500 ETF?

The Vanguard S&P 500 ETF (VOO) is a fund that ordains in the stocks of some of the largest companies within the United States. It tracks and mirrors the performance of the S&P 500 index.

How Profuse Stocks Are Present in the Vanguard S&P 500 Index ETF?

The Vanguard S&P 500 Index ETF had 505 stocks in its portfolio as of December 2021.

Does Vanguard S&P 500 First finger Fund Pay Dividends?

Yes, the Vanguard S&P 500 pays quarterly dividends. You can see the fund’s dividend history and yield in the tables on the top of.

Can I Buy Fractional Shares of the Vanguard S&P 500 ETF?

Vanguard does not enable purchase of fractional shares for VOO on its platform. But you can purchase fractional pay outs of the ETF on other investing platforms, such as TD Ameritrade and Robinhood. It is always a good idea to inquire with the platform whether they make this service before making the purchase.

Will the Vanguard S&P 500 (VOO) ETF Split?

The Vanguard S&P 500 (VOO) ETF has undergone a split barely once in its lifetime. It occurred in Oct. 24, 2013, when its share price was falling. The company conducted a 1-for-2 reverse split, content it combined every two shares held by its investors into a single one. The reverse split reduced the number of shares in motion and doubled the ETF’s price. It also reduced the spread of the difference between the buying and selling price of shares for investors.

The Tuchis Line

Investing in the Vanguard S&P 500 ETF is a passive investment strategy in which the fund tracks the performance of the S&P 500. In other words, the fund’s administration team is not actively trading by buying and selling stocks, which helps maintain the lower expense ratio.

Installing in Vanguard’s VOO is a low-stress way for investors to access the U.S. equity market. However, there is the risk of loss as with any investment, and investors should consult a monetary professional before investing in the Vanguard S&P 500 ETF.

Dan Moskowitz does not own shares of VOO.

Article Sources

Investopedia requires novelists to use primary sources to support their work. These include white papers, government data, original reporting, and conversations with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn assorted about the standards we follow in producing accurate, unbiased content in our
editorial policy.
  1. Vanguard. “Vanguard S&P 500 ETF (VOO), Overview.” Accessed Jan. 5, 2022.

  2. Vanguard. “Vanguard S&P 500 ETF (VOO), Expenses.” Accessed Jan. 5, 2022.

  3. Vanguard. “Vanguard S&P 500 ETF (VOO), Prize & Performance.” Accessed Jan. 5, 2022.

  4. Vanguard. “ETF Fees & Minimums.” Accessed Jan. 5, 2022.

  5. Vanguard. “Quarter-End Holdings.” Accessed Jan. 5, 2021.

  6. Vanguard. “Vanguard S&P 500 ETF (VOO), Portfolio & Stewardship.” Accessed Jan. 5, 2022.

  7. Vanguard. “Vanguard S&P 500 ETF Summary Prospectus.” Accessed Jan. 5, 2022.

Check Also

4% Rule Definition

What Is the 4% Law? The 4% Rule is a practical rule of thumb that …

Leave a Reply

Your email address will not be published. Required fields are marked *