👉️ Food Prices Are On The Rise Again: But Should We Be Concerned? 📈 

👉️ The S&P 500 Showdown: VOO vs. SPY: Which One Is Better? ✅ 

👉️ 5 Day Email Series: Learn How To Analyze Dividend Stocks Like A Pro (Free) 💰️

Food Prices Are On The Rise Again 📈 

In November, egg prices shot up by 8.2% nationwide, logging one of the highest monthly spikes in the past 2 decades according to CPI data released last week.

And the spike isn’t only on eggs.

Consumers have also seen a rise in the price of beef, coffee and non-alcoholic beverages. The total effect on grocery prices is the largest movement we’ve seen since January 2023.

Economists are saying not to panic as the sudden price hikes are a reflection of isolated incidents rather than something that is indicating a reacceleration of inflation.

“Overall grocery price inflation is relatively tame; it’s essentially in line with where it was before the pandemic … nothing alarming,” said Gregory Daco, EY Parthenon’s chief economist. “But prices relative to where they were before the pandemic remain very high.”

Even before “inflation” became a word we all know and hate, food prices have been subject to price fluctuations due to weather events, crop yields, disease, war, logistics issues and sudden spikes in demand. 

That’s what is happening with eggs, beef, coffee and orange juice.

Eggs (+37.5% annually): A bird flu outbreak is ravaging flocks across the country, reducing the supply at a time when Americans are in festive moods and baking, cooking and dining out more.

Beef (+5% annually): US cattle inventory is at the lowest level in more than 70 years, according to the American Farm Bureau Federation. Driven by drought and other rising costs, the contraction is expected to continue through 2025 as dry conditions persist.

Orange juice (frozen juices +17.2% annually; fresh juices 3.1% annually): Frozen non-carbonated juices are a beverage category that was hit by hurricanes, bad weather and a citrus disease. And the future may be looking even worse for orange juice as Brazil, which supplies about 30% of America’s imported OJ, had its worst harvest in decades because of flooding, drought and citrus greening disease.

As Gregory Daco said, this shouldn’t be cause for concern.

It’s just short-term volatility due to outside factors that are uncontrollable. 

The S&P 500 Showdown: VOO vs. SPY - Which One Is Better?

If you’re looking to gain exposure to the S&P 500, two of the most popular ETFs are SPDR’s S&P 500 ETF Trust (SPY) and Vanguard’s S&P 500 ETF (VOO).

What is the S&P 500?

The S&P 500 Index or “Standard & Poor's 500 Index” is a market-capitalization-weighted index of 500 publicly traded companies in the U.S.

It’s considered one of the best gauges of large U.S. stocks and often used as the benchmark for stock market performance. 

When you hear someone say, “I beat the market,” they are typically referring to beating the S&P 500.

You can’t invest in the S&P directly as it’s an index, but you can own ETFs which track its composition and performance.

In today’s post, we’re going to be doing a deep dive into both and highlighting which one is the better choice:

SPY OR VOO.

SPDR S&P 500 ETF Trust (SPY)

SPY was launched in 1993 and is the largest ETF in the world with $638M of Assets Under Management.

The fund is highly liquid, with some of the highest daily trading volumes of ~45M shares.

The fund has been around for a long period of time, which makes it a go-to for institutional and retail investors.

It’s typically used by retail investors to gain market exposure or for hedging purposes due to its strong liquidity.

Vanguard S&P 500 ETF (VOO)

VOO was launched in 2010 as Vanguard’s answer to SPY.

The fund offers the same exposure to the S&P 500 but with a lower expense ratio (we’ll get into that), which makes it an attractive option for investors who implement a “buy and hold” strategy.

VOO has grown significantly since it started trading and is expected to surpass SPY’s Assets Under Management in 2025.

Currently, it sits as the 2nd largest ETF in the world at $588M in Assets Under Management with a daily trading volume of 5.6M shares.

SPY vs. VOO: The Similarities

• Both ETFs track the S&P 500

• Both ETFs have similar weightings to each company in the fund (see top 15 holdings below)

• Both ETFs provide investors with exposure to various sectors in the S&P 500

• Both ETFs provide investors with a low-risk low-cost option to invest in the U.S equity market

SPY vs. VOO: The Differences 

Expense Ratios

SPY’s Expense Ratio: 0.09%

VOO’s Expense Ratio: 0.03%

Fees matter if you’re going to hold long-term.

VOO wins this category.

Liquidity and Trading Volume

SPY is one of the most traded ETFs with high daily trading volumes, which provides a benefit for investors who are looking to engage in frequent trading. Higher volumes means narrower bid-ask spreads.

SPY wins this category.

Tracking Error

An ETF's tracking error is the difference between the returns of the ETF and the benchmark index it's intended to mimic. 

It's a statistical measure that's usually reported as a standard deviation percentage.

Because of SPY’s higher expense ratio, its tracking accuracy will almost always be lesser than that of VOO.

1-Year Tracking Difference:

VOO: -0.03 bps

SPY: -0.18 bps

VOO wins this category.

Performance

Over the last 3 years, the maximum drawdown each fund has experienced is as follows:

SPY: -24.50%

VOO: -24.52%

Over the last 5 years, each funds performance is as follows:

SPY: 90.56%

VOO: 90.75%

The trailing 12 month dividend yield is as follows:

SPY: 1.15%

VOO: 1.21%

VOO wins this category.

Diversification

VOO is more heavily weighted among it’s top 15 holdings with 41.34% of the total fund allocated to these 15 companies (versus SPY at 40.95%).

Concentration is great when the top 15 are performing well, but if they aren’t your losses are amplified.

Below is an image of the difference in sector holdings.

As you can see, VOO is more heavily weighted in Informational Technology, Consumer Discretionary, Health Care and Financials.

Due to the small variances in diversification percentages, neither fund has the edge in this category.

What’s The Better Fund?

SPY is better suited for: 

Short-term or high-frequency traders who prefer liquidity.

Investors who implement a hedging strategy due to its high trading volume. 

VOO is better suited for: 

Long-term investors looking for a low-cost fund that won’t eat into their returns.

You can’t go wrong picking either, but the numbers tell us that VOO is the better choice by a very small margin.

See you in the next one!

Alex (The Dividend Dominator)
Founder and CEO of Dividend Domination Inc.
Follow me on Twitter, Instagram and LinkedIn

Having trouble analyzing dividend stocks?

I’ve got you covered.

I put together a 5-day email series teaching you everything you need to know about analyzing dividend stocks like a Wall Street Analyst.

• What ratios you should be looking at

• How to figure out if a stock will keep growing its dividend

• How to make sure you don’t experience dividend cuts

• How to find the needles in the haystack

When you finish this email series, you’ll have all the tools you need to start picking the winners.

Click “Yes please, I’m ready to level up” on the poll below to get the first email sent right to your inbox.

Enjoy!