What VOO Does Well, What It Risks and Who It Suits

For many investors, VOO has been a very good investment. It gives you the 500 largest US companies for 0.03% a year, it has tracked the S&P 500 within a few hundredths of a percentage point, and it returned 14.79% a year at NAV from its launch on 7 September 2010 to 31 October 2026. Whether it is a good investment for you depends on your time horizon, what else you own and how you behave when the market falls.

VOO, the Vanguard S&P 500 ETF, is not risk-free. It fell 18.15% in 2022, its top 10 holdings were 40.6% of the fund on 30 September 2026, and it holds only large US companies. The S&P 500 itself returned −0.95% a year over the decade to 2009, before VOO existed.

VOO is the fund almost everyone tells you to buy, which is exactly why so few owners ever look inside it. Before you put serious money into it, you should know what you actually own, how far it has fallen before, how it is taxed and what you will do in the next bad year. FRC’s research-driven How to Invest in VOO course answers all of it from Vanguard’s own SEC filings and the S&P 500’s published rules, so you own VOO with a plan rather than a recommendation. Before you invest thousands, invest a small fraction in knowing exactly what you’re buying.

Follow the link to the course, watch the short video and make your own call on whether it fits. No finance degree or prior study is needed; the course is open to anyone who invests.

For how the fund works from start to finish, see FRC’s complete guide to what VOO is.

VOO at a Glance

In plain terms, VOO is the S&P 500 at almost no cost, with all of the index’s gains and all of its falls. Whether that is good depends on how long you can hold it and whether you can sit through the bad years.

What VOO Does Well

Almost No Cost

VOO charges 0.03% a year, or $3 on every $10,000. It was 0.06% when it launched in 2010.

Costs compound just as returns do. As a hypothetical, $10,000 growing at 7% a year for 20 years ends at about $38,480 at a 0.03% fee and about $33,619 at 0.75%, a difference of almost $4,900 from the fee alone.

It Tracks the Index Closely

VOO trailed the S&P 500 in every year from 2012 to 2025, but only by 0.02 to 0.06 percentage points, which is roughly its fee. In 2025 it returned 17.84% against 17.88% for the index.

That makes VOO a near-perfect stand-in for the S&P 500. You get the market’s return, minus a sliver, with no manager deciding what to buy.

Most Professional Stock Pickers Fall Behind It

S&P Dow Jones Indices’ SPIVA U.S. Year-End 2025 Scorecard, published on 3 March 2026, found that 79% of active large-cap US equity funds underperformed the S&P 500 in calendar 2025. The share changes from year to year, and no one knows in advance which funds will win.

Before costs, active managers as a group earn roughly the market’s return, because together they are the market. After their higher fees, the average falls behind, which is the main reason a low-cost index fund like VOO has been hard to beat.

A Strong Long-Term Record

Thirteen of the 15 full years from 2011 to 2025 were positive for VOO. To 31 October 2026, it returned 12.07% over one year, 23.37% a year over three years, 12.02% a year over five years and 15.40% a year over 10 years, at NAV. The three-year figure covers a strong run from late 2023 with no full bear market, so it is not a normal pace.

As a hypothetical, $10,000 at VOO’s launch with everything reinvested grew to about $92,733 by 31 October 2026. Over the 10 years to that date, $10,000 grew roughly fourfold. For every year in detail, see FRC’s VOO performance history.

Tax-Efficient in a Taxable Account

VOO paid no capital gains distributions from 2010 to 2025, and about 97.16% of its 2025 income distributions counted as qualified dividends, taxed at 0%, 15% or 20%. Its portfolio turnover was 2% in 2025.

Vanguard’s figures for the 10 years to 31 December 2025 show 14.78% a year before tax and 14.32% after tax on distributions. In a taxable account, the dividends are taxed every year even if you reinvest them, but most of the tax waits until you sell.

A Growing Dividend

VOO’s dividend per share rose in 13 of the 14 years from 2012 to 2025, falling only in 2020, and grew about 8.1% a year from 2011 to 2025. It reached $7.068 a share in 2025. For every quarterly payment, see FRC’s VOO dividend history.

Being Told to Buy VOO Is Not the Same as Knowing Why

The most recommended fund in the market is also the one investors examine least. Being told to buy VOO is not the same as knowing why you own it, and that difference shows up in the first bad year.

VOO’s record since 2010 is excellent, but almost all of it was earned in a strong period for large US companies. The investors who do well in VOO over decades are the ones who stay invested when it falls 20% or 30%, and the ones most likely to sell at the bottom are those who bought on someone else’s word.

FRC’s How to Invest in VOO course gives you the understanding that keeps you invested. Using Vanguard’s SEC filings and S&P Dow Jones Indices’ methodology, you’ll see exactly what VOO holds and how that has shifted, how it behaved in 2018, 2020, 2022 and 2025, how its dividends are taxed in each type of account and how it compares with SPY, IVV and the rest. You’ll finish with your own written VOO plan, and learners who pass the final examination receive an FRC Certificate of Completion. Protect the larger sum by spending the smaller one first.

VOO also works best when you understand the funds around it. ETF Investing for Beginners shows you how to compare any ETF on cost, risk and return. ETF Investing Strategies shows you how to combine index, income and bond funds, and Advanced ETF Investing takes you into tracking, after-tax returns and portfolio construction.

What VOO Risks

It Falls With the Market

VOO holds the S&P 500, so it takes every fall in full. Its worst quarter was −19.63%, in the quarter to 31 March 2020, and its worst full year was −18.15% in 2022.

As a hypothetical, $10,000 in VOO on 31 December 2019 was worth about $8,037 on 31 March 2020. It was back above $10,000 by 30 September 2020, but only for investors who did not sell.

The Biggest Risk Is Often the Investor

VOO’s NAV per share was $436.47 at the end of 2021, $351.41 at the end of 2022 and $436.63 at the end of 2023. An investor who sold at the end of 2022 locked in a loss of about 19.5%; one who held was back where they started a year later.

The fund did nothing different in either case. The result depended entirely on what the owner did in the bad year, which is why a written plan made before a fall is worth more than any prediction.

The Index Has Had Long Bad Stretches

Before VOO existed, the S&P 500 fell 37.6% over 2000 to 2002 and 37.00% in 2008. Over the full decade to 31 December 2009, it returned −0.95% a year.

VOO has never lived through a decade like that. A strong record since 2010 is real, but it is not the whole history of the index the fund follows.

It Has Become More Concentrated

VOO is weighted by company size, so the biggest companies carry the most weight. At the end of 2014, the top 10 holdings made up 17.8% of the fund; on 30 September 2026, they made up 40.6%, and information technology alone was 39.7%.

NVIDIA was the largest holding at 8.39% on 30 September 2026. Investors who also own QQQ, JEPQ or individual technology shares can end up with far more in a handful of companies than they realise: 87 companies held by both VOO and QQQ made up 54.5% of VOO’s value and 95.4% of QQQ’s.

It Holds Only Large US Companies

VOO owns no small or mid-sized companies and had 0.0% in foreign holdings on 30 September 2026. Investors who want the whole US market sometimes use a total market fund instead, and those who want other countries add an international fund.

Investors outside the US face extra costs. US dividends paid to a foreign person face 30% withholding unless a tax treaty lowers it, and on a yield of about 1.1%, 30% withholding takes about 0.33% of the investment a year, roughly 11 times VOO’s fee. Their returns also rise and fall with the exchange rate against the dollar.

For the most common alternative, see FRC’s guide to VOO vs VTI.

It Pays Little Income

VOO’s 30-day SEC yield was 1.02% on 31 October 2026, and its trailing yield has fallen from 1.88% in 2019 to about 1.13% in 2025, because the price rose faster than the dividend. Investors who need cash from their portfolio usually have to sell shares or pair VOO with income funds.

How VOO Compares With Other Choices

All four S&P 500 ETFs hold the same index, so the differences are structure, cost and trading. For the oldest rival, see FRC’s guide to SPY vs VOO, and for the dividend alternative, see FRC’s guide to SCHD vs VOO.

Who VOO Tends to Suit

The profiles below are hypothetical. They show how investors weigh VOO’s trade-offs, not what anyone should do.

Who VOO May Not Suit

Investing a Lump Sum or Monthly

Some investors buy VOO all at once; others add a fixed amount every month. As a hypothetical, $100 a month from 2015 to 2025, $13,200 paid in, grew to about $32,298 by the end of 2025.

Monthly investing does not guarantee a better result, but it spreads purchases across good and bad prices and builds the habit. The right approach depends on when the money is available and how you would feel investing a large sum just before a fall.

Questions to Answer Before You Buy

How long can you leave the money invested: five years, 10 years or more? Could you hold through a 34% fall like the one in early 2020 without selling? How much large US technology do you already own?

Which account will hold VOO, and do you need income from it now? If any answer is unclear, the question of whether VOO is a good investment for you is not settled yet.

Frequently Asked Questions

Is VOO a good investment right now?

That depends on your time horizon and goals, not on the month. To 31 October 2026, VOO returned 12.07% over one year and 15.40% a year over 10 years at NAV, but it can fall sharply at any time, as it did in 2022.

Does Warren Buffett recommend VOO?

Not by ticker. In his 2013 letter to Berkshire Hathaway shareholders, Warren Buffett wrote that his instructions for money left to his wife put 90% into a very low-cost S&P 500 index fund, and he suggested Vanguard’s. VOO is the ETF share class of that Vanguard fund.

Is VOO a good long-term investment?

Its long-term record has been strong: 14.79% a year at NAV from its 2010 launch to 31 October 2026. The S&P 500 has also had long poor stretches, including a −0.95% yearly return over the decade to 2009, so long-term investors plan for both.

Is VOO safe?

No stock fund is safe from loss. VOO’s worst quarter was −19.63% in early 2020 and its worst full year −18.15% in 2022, but it is very large, very cheap and holds about 500 companies.

How risky is VOO?

VOO carries full stock market risk. Its 3-year standard deviation was 12.43% at 30 September 2026, its worst quarter was −19.63% and the S&P 500 fell about 25.4% during 2022, including dividends. It is less risky than a single stock but far riskier than cash or bonds.

Can VOO lose money?

Yes. It lost money in 2018 and 2022, the only two negative full years from 2011 to 2025.

Is VOO better than an actively managed fund?

Over most periods, the S&P 500 has beaten the majority of active large-cap funds. SPIVA’s Year-End 2025 Scorecard found that 79% of them underperformed the index in 2025.

Is VOO good for beginners?

Many beginners use it because it is simple, cheap and broad. It still needs a plan for falls, because new investors are the most likely to sell at the wrong time.

Is VOO good for dividend income?

Not on its own. VOO’s trailing 12-month yield was about 1.08% on 10 November 2026, so $100,000 would have paid roughly $1,080 a year. Its dividend has grown over time, but investors who need large income usually add income funds or sell shares.

Is it smart to invest only in VOO?

Some investors hold VOO alone because it is simple and cheap. It leaves out small and mid-sized companies and every market outside the US, so others pair it with a total market fund, an international fund or bonds depending on their goals.

Is VOO good for retirement?

It is widely used as a growth core in retirement accounts. Retirees who rely on it usually keep cash or bonds alongside, because VOO’s yield is small and its value can fall 20% or more.

What if I had invested $10,000 in VOO 10 years ago?

VOO returned 15.40% a year at NAV over the 10 years to 31 October 2026, so $10,000 with dividends reinvested would have grown to about $41,900 before taxes.

How much will $100,000 in VOO be worth in 10 years?

No one can say, because future returns are unknown. As illustrations only: at VOO’s 15.40% a year from the past 10 years, $100,000 would grow to about $419,000; at a hypothetical 7% a year, it would grow to about $196,700. The S&P 500 has also had a decade with a negative return.

Is VOO or SPY better?

Both hold the S&P 500. VOO charges 0.03% and SPY 0.0945%; SPY is a unit investment trust, which limits how it handles cash and securities lending, but it trades very heavily.

Is VOO too concentrated in technology?

It is more concentrated than in the past: information technology was 39.7% of the fund on 30 September 2026, and the top 10 holdings 40.6%. That reflects the market’s own weights, not a choice by Vanguard.

Know What You Own Before You Rely on It

VOO has done what it was built to do: deliver the S&P 500’s return at almost no cost, with high tax efficiency and a growing dividend. The price of that return is taking every market fall in full, a growing tilt toward a few large technology companies and almost no income.

For investors who can hold through bad years, it has been one of the best tools available. FRC’s How to Invest in VOO course gives you the evidence, the history and a written plan so that you are one of them. Knowledge is the one cost in your portfolio that pays for itself every year you hold.

This article is general education, not investment advice. Past performance does not guarantee future results.