SPY vs VMBS
SPY vs VMBS
State Street SPDR S&P 500 ETF Trust vs Vanguard Mortgage-Backed Securities ETF
Quick Verdict
VMBS has a lower expense ratio. SPY delivered stronger 1-year returns. VMBS offers more diversification with 4688 holdings.
Side-by-Side Comparison
| Metric | SPY | VMBS | Winner |
|---|---|---|---|
| Expense Ratio | 0.09% | 0.03% | |
| AUM | $789.1B | $15.6B | |
| Dividend Yield | 1.01% | 4.15% | |
| Holdings | 505 | 5,043 | |
| YTD Return | +9.93% | +0.01% | |
| 1Y Return | +19.50% | +4.32% | |
| 3Y Return (annualized) | +19.33% | +4.53% | |
| 5Y Return (annualized) | +12.82% | +0.22% | |
| Volatility (annualized) | 15.3% | 4.2% | |
| Max Drawdown | -56.5% | -18.4% | |
| Fund Family | State Street Investment Management | Vanguard (US) | |
| Category | Equity | Fixed Income | |
| Inception | Jan 22, 1993 | Nov 19, 2009 |
SPY vs VMBS Performance
State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management and Vanguard Mortgage-Backed Securities ETF (VMBS) is a ETF from Vanguard (US). Over the past year SPY returned +19.50% while VMBS returned +4.32%. Year to date, SPY is up 9.93% versus a gain of 0.01% for VMBS.
Over three years, SPY compounded at +19.33% per year against +4.53% for VMBS; over five years the annualized figures are +12.82% and +0.22% respectively. Across the full 17-year window we track, SPY has the edge at +8.74% annualized vs +0.49%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
SPY has been the more volatile fund, with annualized monthly volatility of 15.3% compared with 4.2% for VMBS. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -56.5% for SPY and -18.4% for VMBS. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.26. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
SPY charges 0.09% per year while VMBS charges 0.03%. On a $10,000 position that is $9 vs $3 annually, a gap of $6 per year that compounds over a long holding period. On income, SPY currently yields 1.01% against 4.15% for VMBS.
Holdings Overlap
SPY and VMBS share 0 holdings out of 5191 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, SPY or VMBS?
SPY has an expense ratio of 0.09% while VMBS charges 0.03%. VMBS is the cheaper option. On a $10,000 investment, that is $6 per year of difference.
Which performed better, SPY or VMBS?
Over the past year SPY returned +19.50% vs +4.32% for VMBS, so SPY leads on 1-year performance. Over the longest common window we track (17 years), SPY annualized +8.74% vs +0.49% for VMBS. Past performance does not guarantee future results.
Which is riskier, SPY or VMBS?
SPY has been the more volatile fund at 15.3% annualized versus 4.2% for VMBS. Worst drawdown: SPY -56.5% vs VMBS -18.4%.
Should I hold both SPY and VMBS?
SPY and VMBS have a monthly-return correlation of 0.26, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between SPY and VMBS?
SPY and VMBS share 0 common holdings with a 0.0% weight overlap. Combined, they hold 5191 unique securities.
Which pays a higher dividend, SPY or VMBS?
SPY yields 1.01% while VMBS yields 4.15%, so VMBS currently pays the higher dividend yield.
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