June 20, 2026 · 11 min read
Index funds have beaten over 90% of actively managed funds over the past 20 years. But which index fund should you own? The differences between VOO, VTI, SPY, and FZROX matter more than most investors realize.
The evidence is overwhelming: over any 15-year period, more than 90% of active fund managers underperform their benchmark index after fees. John Bogle's simple insight — minimize costs, capture the market return — has made Vanguard's index funds the largest financial products in history.
An index fund buys every stock in a given index (S&P 500, total market, etc.) in proportion to their weight. Because there's no research team and minimal trading, costs are near zero. Over 30 years, the difference between a 0.03% and a 1.0% expense ratio compounds to tens of thousands of dollars on a $100,000 portfolio.
| Fund | Ticker | Index Tracked | Expense Ratio | AUM | Dividend Yield |
|---|---|---|---|---|---|
| Vanguard S&P 500 ETF | VOO | S&P 500 | 0.03% | ~$570B | ~1.3% |
| Vanguard Total Stock Market | VTI | CRSP US Total Market | 0.03% | ~$460B | ~1.3% |
| SPDR S&P 500 ETF | SPY | S&P 500 | 0.09% | ~$590B | ~1.3% |
| iShares Core S&P 500 ETF | IVV | S&P 500 | 0.03% | ~$520B | ~1.3% |
| Fidelity ZERO Total Market | FZROX | Fidelity US Total Market | 0.00% | ~$25B | ~1.2% |
| Invesco Nasdaq 100 ETF | QQQM | Nasdaq 100 | 0.15% | ~$35B | ~0.6% |
Both VOO (Vanguard) and SPY (State Street) track the S&P 500 exactly. They hold the same 500 stocks in the same proportions. Their 10-year returns are within basis points of each other.
The practical differences:
This is the most common dilemma for new index investors. VOO owns the 500 largest US companies. VTI owns the entire US stock market — approximately 3,700 companies including small-caps and mid-caps.
Because large-cap stocks dominate both indexes by market-cap weighting, VTI and VOO behave almost identically. The small-cap component of VTI adds modest diversification and captures the historical small-cap premium — but that premium has been absent for much of the past decade.
Verdict: Either works. VTI is marginally more diversified; VOO is slightly simpler to track. Owning both is redundant.
Fidelity's ZERO funds (FZROX for total market, FXAIX for S&P 500) charge literally zero expense ratio — the first and only major index funds to do so. How does Fidelity make money?
Verdict: If you're committed to Fidelity for life, FZROX is excellent. For portability, the 0.03% difference vs VOO/VTI is too small to override the convenience of a transferable ETF.
QQQM (the retail-friendly version of QQQ) tracks the Nasdaq 100 — the 100 largest non-financial companies on the Nasdaq exchange. Because tech dominates Nasdaq, QQQM is roughly 55% technology and heavily weighted to Apple, Microsoft, NVIDIA, Amazon, and Meta.
QQQM has dramatically outperformed the S&P 500 over the past decade — but the outperformance is almost entirely explained by the AI-driven mega-cap tech boom. This creates concentration risk:
Verdict: QQQM is a valid tilt for investors who want additional tech/AI exposure, but should be a complement to a core index fund, not a replacement.
ETF index funds (VOO, VTI, SPY) are significantly more tax-efficient than mutual fund index funds (like Vanguard's VFIAX) in taxable brokerage accounts:
The biggest risk with index fund investing is abandoning the plan during volatility. The S&P 500 has declined 20%+ in 2000, 2002, 2008–2009, 2020, and 2022. In each case, investors who held and continued contributing recovered fully and then some.
The research on investor behavior shows that the average investor dramatically underperforms the average fund they hold — because they sell after crashes and buy after rallies. A simple VOO bought monthly via automatic contribution, held for 20+ years, will outperform nearly any active strategy including most tactical approaches.
The best index fund is the one you'll hold through a 40% drawdown without selling. Start simple, automate contributions, and resist the urge to optimize.