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Vanguard S&P 500 ETF

VOO:NYSE

equity ETF | passive | Vanguard | Tracks S&P Dow Jones Indices

Market Price

US$633.57 (22 Jan 2026)

+13.14% (YoY)

NAV

US$622.93

+1.71% Premium

Yield

1.13%

0.00% (YoY)

Expense Ratio

3.00%

-91% vs Avg: 35.00%

Box Set (ETF)

⚡ Executive Summary

📊 The Bottom Line

This ETF tracks the S&P 500, offering exposure to the 500 largest US companies. With strong liquidity and a passive indexing approach, it provides a highly efficient way to access broad US large-cap equity markets. Bull case projects NAV reaching US$750 (+18%) while bear case suggests US$500 (-20%) over 12-18 months. Its remarkably low expense ratio makes it a fundamental building block for diversified portfolios.

⚖️ Risk vs Reward

The S&P 500's underlying holdings currently trade at an elevated P/E ratio of 28.4x, a premium to its historical average and the broader ETF category average of 20.55x. While the market has seen robust earnings growth, much of the optimism is already priced in, particularly within the heavily weighted technology sector. This positioning suggests a balanced risk-reward profile where significant upside requires continued strong earnings and potentially multiple expansion, while downside risk is amplified by current valuations and concentration in a few mega-cap stocks. Compared to diversified global equities, the U.S. large-cap market, as represented by VOO, may offer less valuation upside but benefits from structural economic strengths.

🚀 Why VOO Could Soar

• Robust corporate earnings growth, potentially accelerating to 15% driven by AI productivity and innovation, could drive the ETF's NAV by 10-15% over 12-18 months.
• Sustained disinflation leading to more aggressive Federal Reserve interest rate cuts could expand equity multiples by 10-20%, adding significant upside to the underlying holdings.
• Continued strength in U.S. consumer spending, supported by a robust labor market, would boost revenues for the ETF's domestically focused companies, contributing to 5-8% earnings outperformance.

⚠️ What Could Go Wrong

• A sharper-than-expected economic slowdown or recession could lead to a 20-25% decline in corporate earnings, potentially causing the ETF's NAV to fall by 20-30% due to earnings and multiple compression.
• The S&P 500's current P/E of 28.4x is above historical averages. A reversion to a 20x P/E, coupled with high concentration in a few mega-cap tech stocks (top 10 at ~39% of assets), could trigger a 15-20% correction if growth disappoints.
• Should inflation remain stubbornly high, forcing the Fed to maintain restrictive monetary policy, higher discount rates could compress equity valuations across the board by 10-15% over the next year.

🏢 Fund Overview

What Are You Actually Buying

The S&P 500 Index tracks 500 of the largest U.S. companies, representing approximately 80% of the U.S. equity market by market capitalization.
These companies, often referred to as 'Blue Chips', are well-established, profitable entities like Apple, Microsoft, and NVIDIA, known for their stability and market leadership.
Investing in the S&P 500 provides diversified exposure across various sectors, typically favoring large-cap growth and blend styles, making it a foundational element for many portfolios.
While these securities may have slower growth rates compared to smaller companies, they often offer consistent dividends and broad market representation, making them less volatile than more concentrated investments.

Market Dynamics & Outlook

The S&P 500's P/E ratio is currently 28.4x, trading above the ETF Database category average of 20.55x, driven by strong earnings growth of 22.8% and enthusiasm for mega-cap technology stocks.
Concentration risk is notable, with the top 10 holdings accounting for approximately 39.12% of the ETF's assets, and technology stocks making up a significant 35.14% of the portfolio.
While the market has shown resilience, potential headwinds include increasing regulatory scrutiny for large tech companies and sensitivity to interest rate changes given the long-duration nature of growth stocks.

🎯 Why This Matters

Understanding the S&P 500's current dynamics is critical as valuations reflect robust earnings and significant exposure to the technology sector. This concentration implies that the overall market's performance is increasingly tied to a few dominant players, presenting both opportunities for continued growth and potential vulnerabilities to sector-specific downturns or shifts in investor sentiment.

📈 Valuation & Analysis

Historical Performance

YTD

+1.03%

+17.82%

Yearly Growth (3Y)

+22.97%

Yearly Growth (5Y)

+14.38%

Yearly Growth (10Y)

+14.78%

Current Valuation

The Vanguard S&P 500 ETF (VOO) currently trades with a market-cap-weighted aggregate Price-to-Earnings (P/E) ratio of 28.4x and a Price-to-Book (P/B) ratio of 5.2x. The current dividend yield stands at 1.13%. This P/E ratio is notably higher than the ETF Database Category Average of 20.55x, indicating a premium valuation for large-cap U.S. equities. While below the peak P/E ratios observed during the dot-com bubble, current valuations reflect strong earnings growth (22.8%) and investor optimism, particularly for mega-cap technology companies. The elevated P/E suggests that the market is pricing in continued robust performance from the underlying constituents.

The Bull Case - Upside to

Robust Corporate Earnings Growth

Medium Probability

S&P 500 earnings growth accelerating to 15% (above consensus) fueled by technology advancements and cost efficiencies could drive the ETF's NAV by 10-15% over 12-18 months.

Sustained Disinflation & Interest Rate Cuts

Medium Probability

Further deceleration in inflation leading to more aggressive Federal Reserve interest rate cuts could expand equity multiples by 10-20%, adding significant upside to the underlying holdings.

Strong Consumer Spending & Economic Resilience

High Probability

Continued strength in U.S. consumer spending, supported by a robust labor market, would boost revenues for the ETF's domestically focused companies, contributing to 5-8% earnings outperformance.

The Bear Case - Downside to

Economic Slowdown or Recession

Medium Probability

A sharper-than-expected economic slowdown or recession could lead to a 20-25% decline in corporate earnings, potentially causing the ETF's NAV to fall by 20-30% due to earnings and multiple compression.

Elevated Valuation & Concentration Risk

Medium Probability

The S&P 500's current P/E of 28.4x is above historical averages. A reversion to a 20x P/E, coupled with high concentration in a few mega-cap tech stocks (top 10 at ~39% of assets), could trigger a 15-20% correction if growth disappoints.

Persistent Inflation & Higher-for-Longer Rates

Medium Probability

Should inflation remain stubbornly high, forcing the Fed to maintain restrictive monetary policy, higher discount rates could compress equity valuations across the board by 10-15% over the next year.

Risk/Reward Assessment

The current risk-reward profile for VOO, representative of the broader S&P 500, appears balanced but with significant sensitivities. On the upside, robust corporate earnings, driven by technological innovation and potential interest rate cuts, could further propel valuations. However, the market's current elevated P/E ratio of 28.4x and the substantial concentration in a few large technology companies introduce considerable downside risk. An economic downturn or the persistence of high inflation leading to sustained higher interest rates could trigger a notable market correction. Investors should weigh the potential for continued growth against the risks of valuation compression and the impact of macroeconomic headwinds. While VOO offers broad diversification across sectors, its market-cap weighting means its performance is heavily influenced by a relatively small number of dominant firms, making it susceptible to any setbacks faced by these giants.

Peer Comparison

• VOO offers one of the lowest expense ratios in the industry at 0.03%, significantly undercutting the category average of 0.35%, ensuring minimal drag on long-term returns. • With over US$1.4 trillion in AUM, VOO boasts exceptional liquidity, resulting in tight bid-ask spreads for efficient trading, even for large orders. • The ETF consistently demonstrates tight tracking to the S&P 500 Index, providing investors with reliable exposure to its target benchmark. • While performance closely mirrors the index and peers, VOO's primary differentiator is its cost-efficiency, making it a preferred choice for buy-and-hold investors seeking core U.S. large-cap exposure.

Fund	Expense Ratio	AUM (B)	1Y Return	3Y Return	5Y Return	Yield
Vanguard S&P 500 ETF (VOO) ⭐	3.00%	US$1474.5B	17.82%	22.97%	14.38%	1.13%
SPDR S&P 500 ETF Trust (SPY)	9.00%	US$718.3B	14.81%	21.30%	13.60%	1.30%
iShares Core S&P 500 ETF (IVV)	3.00%	US$766.2B	17.85%	22.97%	14.39%	1.30%

🎯 Why This Matters

Understanding the valuation and peer landscape is crucial for S&P 500 investors. While VOO presents a compelling low-cost option with excellent tracking, the current premium valuation of the underlying index suggests that future returns may be more driven by earnings growth than multiple expansion. Comparing VOO to its close competitors highlights its operational efficiency and robust liquidity, making it a strong contender for core portfolio allocation, but also underscores the broader market risks applicable to all large-cap index funds.

📊 Appendix

Top 10 Holdings (80+ of ETF Value)

#	Ticker	Logo	Name	Sector	Weight
1	NVDA	N	NVIDIA Corporation	Technology	7.7%
2	AAPL	A	Apple Inc.	Technology	6.9%
3	MSFT	M	Microsoft Corporation	Technology	6.1%
4	AMZN	A	Amazon.com Inc.	Consumer Cyclical	3.8%
5	GOOGL	A	Alphabet Inc. Class A	Communication Services	3.1%
6	AVGO	B	Broadcom Inc.	Technology	2.8%
7	GOOG	A	Alphabet Inc. Class C	Communication Services	2.5%
8	META	M	Meta Platforms Inc Class A	Communication Services	2.5%
9	TSLA	T	Tesla Inc.	Consumer Cyclical	2.2%
10	BRK.B	B	Berkshire Hathaway Inc Class B	Financials	1.6%

Fund Mechanics

How It Works

The Vanguard S&P 500 ETF (VOO) employs a passive indexing investment approach, aiming to track the performance of the Standard & Poor's 500 Index. The S&P 500 is a market-capitalization-weighted index comprising 500 of the largest U.S. companies across diverse sectors. Vanguard seeks to replicate the index by investing substantially all of its assets in the stocks that make up the index, holding each in approximately the same proportion as its weighting. This full replication strategy minimizes tracking error, ensuring investors receive returns closely aligned with the benchmark's performance. The index is rebalanced on a quarterly basis, with an index committee overseeing constituent selection, which adds flexibility and helps manage transaction costs.

Holdings Breakdown

Number of Holdings

507

Top 10 Concentration

3912.0%

Top 20 Concentration

4472.0%

Turnover Rate

230%

Category	Weight	Description
Technology	35.1%
Financial Services	13.0%
Communication Services	10.9%
Consumer Cyclical	10.6%
Healthcare	9.6%
Industrials	7.5%
Consumer Defensive	4.7%
Energy	2.8%
Utilities	2.3%
Real Estate	1.8%
Basic Materials	1.6%

Cost Efficiency

Expense Ratio

3.00%

Median Bid-Ask Spread

0.000%

Metric	1 Year	3 Year	5 Year
Tracking Error	1.00%	1.00%	1.00%
Tracking Difference	-4.00%	-4.00%	-4.00%

Expense Ratio History

Year	Expense Ratio
2025	3.00%
2024	3.00%
2023	3.00%

Performance History

Year	ETF Return	Benchmark Return	Tracking Diff	Volatility	Max Drawdown	Sharpe Ratio
2025	17.82%	17.88%	-0.06%	19.92%	-23.74%	0.08
2024	24.94%	25.02%	-0.08%	16.23%	-23.74%	1.13
2023	26.33%	26.29%	0.04%	17.88%	-23.74%	0.81
2022	-18.15%	-18.11%	-0.04%	17.88%	-23.74%	0.81
2021	28.60%	28.71%	-0.11%	17.88%	-23.74%	0.81

Annualized Return Since Inception

14.82%

Detailed Peer Comparison

Ticker	Name	Issuer	Exp Ratio	AUM (B)	1Y	3Y	5Y	Yield	StdDev 3Y	Sharpe 3Y	Spread
VOO ⭐	Vanguard S&P 500 ETF	Vanguard	3.00%	US$1474.5B	17.8%	23.0%	14.4%	1.13%	16.23%	1.13	0.000%
SPY	SPDR S&P 500 ETF Trust	State Street Global Advisors	9.00%	US$718.3B	14.8%	21.3%	13.6%	1.30%	N/A	N/A	N/A
IVV	iShares Core S&P 500 ETF	BlackRock	3.00%	US$766.2B	17.9%	23.0%	14.4%	1.30%	N/A	N/A	N/A
Category Average			35.00%	—	13.6%	20.9%	9.5%	1.26%	—	N/A	—

Risk Metrics

Beta

1.00

Alpha

0.00

R-Squared

1.00

Standard Deviation

1 Year	3 Years	5 Years	10 Years
19.92%	16.23%	17.88%	N/A

Sharpe Ratio

1Y	3Y	5Y	10Y
0.08	1.13	0.81	N/A

Sortino Ratio

3 Years	5 Years
N/A	N/A

Maximum Drawdown

1 Year	3 Years	5 Years	Since Inception
-23.74%	-23.74%	-23.74%	-33.70%

Correlations

S&P 500

1.00

Liquidity & Trading

Volume

Avg Daily Shares

9,550,672

Avg Daily Dollar Volume

US$6047.4M

Trend

stable

Bid-Ask Spread

Metric	Value
Median (Percent)	0.000%
Median (Dollar)	US$0.00
During Hours	0.000%
At Close	0.000%
Volatility	low

Premium/Discount to NAV

Metric	Value
Current	171.00%
30-Day Average	1.00%
1-Year Average	0.00%
Standard Deviation	N/A
Max Premium (1Y)	5.00%
Max Discount (1Y)	-5.00%

Creation/Redemption Activity

Trend

stable

Net Flows

Period	Net Flow
1 Month	US$0.0M
1 Quarter	US$0.0M
1 Year	US$0.0M

⚠️ Disclaimer: This ETF research report is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell securities. EC² Invest is not a registered investment advisor. All data is sourced from public sources and may contain errors. Past performance does not guarantee future results. ETF investing involves risk, including possible loss of principal. Always conduct your own research and consult with a qualified financial professional before making investment decisions.