How to Invest in Vanguard S&P 500 ETF

The Vanguard S&P 500 ETF (NYSEMKT:VOO) is one of the largest exchange-traded funds (ETFs) by assets under management (AUM). The ETF had more than $600 billion in AUM in mid-2025, making it the biggest ETF at the time. The fund's massive size, low cost, and focus on the S&P 500 index have made it one of the most popular ETFs.

This guide will teach you everything you need to know about the Vanguard S&P 500 ETF and how to invest in ETFs for beginners.

What Is the Vanguard S&P 500 ETF?

The Vanguard S&P 500 ETF is an ETF managed by The Vanguard Group, a large asset management firm owned by investors in its funds. The ETF invests in the same stocks as the S&P 500 index, which represents the 500 largest publicly traded companies in the U.S. It aims to closely track the index's returns, enabling fund investors to match the stock market's average return.

While ETFs differ from mutual funds, Vanguard offers a similar mutual fund option: Vanguard 500 Index Fund Admiral Shares (NASDAQMUTFUND:VFIA.X).

How to buy Vanguard S&P 500 ETF

It's very easy to invest in the Vanguard S&P 500 ETF. You can buy shares directly from Vanguard or in your regular brokerage account. Here's a step-by-step guide to buying shares of the ETF.

1. Open your brokerage app: Log in to your brokerage account where you handle your investments.
2. Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Holdings of Vanguard S&P 500 ETF

The Vanguard S&P 500 ETF tracks the S&P 500. The broad market index holds roughly 500 of the largest publicly traded companies in the U.S. (it had 505 stocks in mid-2025). The index weighs its holdings based on their market caps. That means companies with larger market caps have a greater impact on the index.

As of mid-2025, the Vanguard S&P 500 ETF's top 10 holdings were:

1. Apple (NASDAQ:AAPL): 7% of the fund's holdings
2. Microsoft (NASDAQ:MSFT): 5.9%
3. Nvidia (NASDAQ:NVDA): 5.6%
4. Amazon (NASDAQ:AMZN): 3.8%
5. Meta Platforms (NASDAQ:META): 2.7%
6. Berkshire Hathaway Class B (NYSE:BRK.B): 2.1%
7. Alphabet Class A (NASDAQ:GOOGL): 1.9%
8. Broadcom (NASDAQ:AVGO): 1.7%
9. Alphabet Class C (NASDAQ:GOOG): 1.6%
10. Tesla (NASDAQ:TSLA): 1.5%.

Those 10 stocks make up about one-third of this ETF's assets. So, while it provides broad exposure to the country's largest stocks, the biggest companies have a significant impact on its returns.

The Vanguard ETF, like the S&P 500, provides investors with diversified exposure to several stock market sectors. Its weighed sector exposure in mid-2025 was:

• Information technology: 29.7%
• Financials: 14.6%
• Health Care: 11.2%
• Consumer Discretionary: 10.3%
• Communication Services: 9.2%
• Industrials: 8.5%
• Consumer Staples: 6%
• Energy: 3.7%
• Materials: 2%
• Real Estate: 2.3%
• Utilities: 2.5%

Because it provides broad sector exposure, investors don't need to invest in sector ETFs unless they want to invest specifically in a particular industry.

Should I invest in Vanguard S&P 500 ETF?

Making any investment is a personal decision. You need to make sure it aligns with your goals, values, and risk tolerance. Here are some reasons you might want to invest in the Vanguard S&P 500 ETF:

• You're seeking an investment that can deliver returns that roughly match those of the S&P 500 index.
• You want a low-cost passive investment.
• You understand that while the Vanguard S&P 500 ETF provides market returns, it also has market risk with volatility that will match the S&P 500.
• You're seeking a diversified investment that provides broad exposure to the U.S. stock market.

On the other hand, here are some reasons the Vanguard S&P 500 ETF might not be right for you:

• You're seeking investments that can deliver higher returns than the S&P 500.
• You're a more risk-averse person and want an investment with lower volatility than the S&P 500.
• You're at or nearing retirement and need more income than the Vanguard S&P 500 ETF can produce.
• You're seeking an investment with less concentration among its top holdings.

Does Vanguard S&P 500 ETF pay a dividend?

The Vanguard S&P 500 ETF paid a dividend of roughly 1.3% in mid-2025 (approximating the S&P 500's dividend yield). The fund makes quarterly dividend income payments. While they will fluctuate from quarter to quarter based on the dividends received, payments have steadily risen over the years:

Although its low dividend yield might not make it one of the best dividend ETFs for income seekers, it does provide a market-matching and steadily rising dividend payment.

What is Vanguard S&P 500 ETF's expense ratio?

A low expense ratio is a hallmark of a Vanguard-managed fund. Since fund investors own the company, it can pass on its economies of scale and lower investment costs to them through a lower expense ratio, enabling fund investors to keep more of their returns.

The Vanguard S&P 500 ETF has an ultra-low expense ratio of 0.03%, significantly below the industry average of 0.22%. The low expense ratio enables investors to keep more of the fund's return.

For example, the management fees charged by Vanguard on a $10,000 investment in the Vanguard S&P 500 ETF would be only $3 per year. For comparison, a similar $10,000 investment in a fund charging 0.22% would cost $22 per year. That higher cost would add up over the years by eating into an investor's returns.

Historical performance of Vanguard S&P 500 ETF

The Vanguard S&P 500 ETF's goal is to closely track the average stock market return as measured by the S&P 500 index. It has delivered on its objective over the years:

As that table shows, the fund's returns have roughly matched those of the S&P 500 over the past one-, three-, five-, and 10-year periods. It has delivered a very slight underperformance due to its quite modest expense ratio. Its ability to deliver market-matching returns makes it one of the best ETFs to buy.

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The bottom line on Vanguard S&P 500 ETF

The Vanguard S&P 500 ETF is one of the largest ETFs focused on delivering returns that match the S&P 500. It has done an excellent job over the years, largely thanks to its ultra-low expense ratio. It's a great fund for investors seeking a low-cost way to earn market-matching returns. It can be a core piece of an investor's portfolio.

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