Best S&P 500 ETF to Invest in Right Now: A Comprehensive Guide for 2025

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The S&P 500, an index that tracks 500 of the largest companies in the U.S., is often considered a benchmark for the overall performance of the U.S. stock market.

For investors looking to gain exposure to the broad market, investing in an S&P 500 exchange-traded fund (ETF) can be a powerful way to do so.

ETFs offer diversification, liquidity, and lower costs compared to individual stocks. But with numerous S&P 500 ETFs available, how do you choose the best one to invest in right now?

In this article, we’ll explore some of the best S&P 500 ETFs to consider in 2025, taking into account factors such as performance, expense ratios, and the strategies behind each fund.

What is an S&P 500 ETF?

Before diving into the best options, it’s essential to understand what an S&P 500 ETF is. These funds aim to mirror the performance of the S&P 500 index.

They hold a portfolio of stocks that replicates the index, providing investors with exposure to a broad range of sectors, such as technology, healthcare, financials, and consumer goods.

The appeal of S&P 500 ETFs lies in their ability to offer broad diversification, low fees, and the convenience of trading like a stock.

Investors can buy shares in these funds, which contain a mix of companies like Apple, Microsoft, Amazon, and more. Because the S&P 500 covers so many sectors, it acts as a good reflection of the overall health of the U.S. economy.

Key Factors to Consider When Choosing the Best S&P 500 ETF

1. Expense Ratio: The expense ratio is the annual fee that a fund charges as a percentage of your investment. Lower expense ratios are typically preferred because they help keep more of your investment working for you. While the expense ratio for S&P 500 ETFs is generally low, it still varies between funds.
2. Performance: Past performance is never a guarantee of future returns, but it can give you an idea of how well the fund has tracked the index over time. Look for ETFs that consistently match or outperform the S&P 500.
3. Liquidity: A more liquid ETF has more shares traded on average, making it easier for you to buy or sell without significantly impacting the price. High liquidity is essential for avoiding large price fluctuations when executing trades.
4. Tracking Error: This refers to how closely the ETF follows the performance of the S&P 500 index. A low tracking error is preferred, as it means the fund is closely mimicking the index’s performance.
5. Dividend Yield: Many S&P 500 ETFs pay dividends, which can be reinvested or taken as income. Look for ETFs with a good balance of capital appreciation and dividend yield, depending on your investment goals.

Top S&P 500 ETFs to Invest in Right Now

Here are some of the best S&P 500 ETFs to consider for 2025:

1. SPDR S&P 500 ETF Trust (SPY)

• Expense Ratio: 0.0945%
• Dividend Yield: ~1.2%
• Assets Under Management: $400 billion+
• Tracking Error: Very low
• Performance (5-Year Annualized): ~9.5%

The SPDR S&P 500 ETF Trust (SPY) is one of the oldest and most popular S&P 500 ETFs on the market. Launched in 1993, it has earned its reputation as a highly liquid and reliable option for investors looking to track the S&P 500.

SPY has a low expense ratio, making it an affordable option for long-term investors, and it’s often used by institutional investors and traders due to its high liquidity.

Why Invest in SPY?

• Liquidity: SPY is one of the most traded ETFs globally, ensuring that investors can enter and exit positions with minimal price impact.
• Reputation: As one of the oldest ETFs in existence, it has a long track record of performance, tracking the S&P 500 very closely.

2. Vanguard S&P 500 ETF (VOO)

• Expense Ratio: 0.03%
• Dividend Yield: ~1.4%
• Assets Under Management: $300 billion+
• Tracking Error: Very low
• Performance (5-Year Annualized): ~9.6%

The Vanguard S&P 500 ETF (VOO) is another excellent choice for those seeking a low-cost way to invest in the S&P 500.

Vanguard is known for its low-cost investing philosophy, and VOO’s expense ratio is one of the lowest in the industry. VOO’s low fees and strong tracking of the S&P 500 index make it an ideal option for long-term investors.

Why Invest in VOO?

• Low Expense Ratio: With an expense ratio of just 0.03%, VOO provides investors with one of the most cost-efficient ways to gain exposure to the S&P 500.
• Long-Term Focus: Vanguard is renowned for its commitment to long-term investing, making VOO a strong option for buy-and-hold investors.

3. iShares Core S&P 500 ETF (IVV)

• Expense Ratio: 0.03%
• Dividend Yield: ~1.4%
• Assets Under Management: $350 billion+
• Tracking Error: Very low
• Performance (5-Year Annualized): ~9.5%

The iShares Core S&P 500 ETF (IVV) is another top contender for S&P 500 exposure. It tracks the S&P 500 index very closely and has a low expense ratio of 0.03%, similar to VOO.

IVV also boasts high liquidity and strong performance, making it a top choice for both retail and institutional investors.

Why Invest in IVV?

• Low Cost and Liquidity: IVV is competitively priced and offers excellent liquidity, making it easy to buy and sell.
• Strong Tracking Performance: IVV consistently tracks the performance of the S&P 500 with minimal deviation.

4. Schwab U.S. Large-Cap ETF (SCHX)

• Expense Ratio: 0.03%
• Dividend Yield: ~1.2%
• Assets Under Management: $30 billion+
• Tracking Error: Low
• Performance (5-Year Annualized): ~9.4%

While not strictly an S&P 500 ETF, the Schwab U.S. Large-Cap ETF (SCHX) closely mirrors the S&P 500’s performance. It invests in large-cap U.S. stocks, making it an excellent choice for those looking to gain exposure to the U.S. economy’s top companies.

Why Invest in SCHX?

• Low-Cost Alternative: SCHX provides a similar exposure to the S&P 500, with an equally low expense ratio of 0.03%.
• Strong Performance: SCHX has delivered strong returns over time, closely tracking the performance of large-cap U.S. stocks.

Final Thoughts

When choosing the best S&P 500 ETF to invest in right now, the decision ultimately depends on your investment goals, cost sensitivity, and preference for liquidity. SPY, VOO, and IVV are all excellent options, with low expense ratios, strong liquidity, and a history of closely tracking the S&P 500 index.

Vanguard’s VOO stands out for its ultra-low expense ratio, while SPY remains the most liquid ETF for active traders.

If you’re looking for an ETF with slightly different exposure but still within the large-cap U.S. market, Schwab’s SCHX is another low-cost alternative.

For investors focused on long-term wealth building, S&P 500 ETFs remain a top choice, and with low fees, minimal tracking error, and strong past performance, these funds are likely to continue being a core component of diversified investment portfolios.

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