VOO outperforms SPY for long-term investors due to lower fees and better dividend handling.

SPDR S&P 500 ETF Trust (SPY) and Vanguard 500 Index Fund ETF (VOO) track the same S&P 500 index with identical holdings, but differ in structure, fees, and dividend handling. SPY, an older unit investment trust, has higher fees (0.0945%) and cannot reinvest dividends internally, while VOO, an open-end fund, charges lower fees (0.03%) and reinvests dividends efficiently. Over ten years, VOO's total return of 320.76% surpasses SPY's 255.32%, mainly due to fee differences and dividend reinvestment. SPY offers superior liquidity and options trading, benefiting active traders, but for long-term buy-and-hold investors, VOO is the more cost-effective choice. Both funds face rising tech concentration risks, but VOO's structure makes it preferable for retirement portfolios.