IWM vs VOO: Which ETF Is Better in 2026?
Last updated early 2026
Short answer
IWM (Russell 2000) and VOO (S&P 500) are genuinely different exposures, not two versions of the same thing. IWM pays more income (~1.2%), leaning toward the ballast side; the other tilts toward growth. This is a role-and-mix decision (how much of each), not an either/or.
The tie-breaker: role, income, and risk
What each is for. IWM tracks Russell 2000 and VOO tracks S&P 500. These play different roles in a portfolio, so the useful question is what job you are hiring each for, not which has the better recent chart.
Income. IWM yields about ~1.2% and VOO about ~1.0% (early 2026). IWM pays more income, which matters if you are drawing from the portfolio; the other leans toward price growth.
Cost. 0.19% vs 0.03% ($19 vs $3 on $10,000 a year).
What each fund tracks: index and methodology
IWM tracks Russell 2000, and VOO tracks S&P 500. Because they follow different benchmarks, the two funds screen and weight their holdings differently, and that is what produces any gap in exposure, concentration, and return between them.
On construction, IWM is market-cap-weighted and VOO is market-cap-weighted. They share a weighting approach, so any difference comes from the underlying index rather than the method.
So these two are answering different questions about your portfolio, which is why the choice is usually how much of each to hold rather than one instead of the other.
IWM vs VOO: cost, size, and yield side by side
| IWM | VOO | |
|---|---|---|
| Expense ratio | 0.19% | 0.03% |
| Fee per $10,000 / year | $19 | $3 |
| Assets under management | ~$70 billion | ~$1.7 trillion |
| Dividend yield | ~1.2% | ~1.0% |
| Inception | May 2000 | September 2010 |
VOO is the cheaper fund at 0.03% versus 0.19%, a gap of about $16 a year on a $10,000 holding. Because these funds hold different things, the cheaper fee is only one input; the exposure difference usually matters more than the cost gap.
On scale, IWM holds about ~$70 billion and VOO about ~$1.7 trillion. Larger funds generally trade at tighter bid-ask spreads and carry deeper options markets, which matters if you trade actively or in size; for buy-and-hold investors it rarely changes the outcome. IWM currently pays the higher dividend yield (~1.2% versus ~1.0%), which shifts more of its return into cash today.
Which fund suits which investor
These are complements, not rivals, so most investors hold both in different roles rather than choosing one. The broader or steadier fund typically works as a larger core position, while IWM, with its higher ~1.2% yield, suits a smaller satellite role for investors who specifically want that income or exposure. An income-focused or drawdown-sensitive investor weights toward the higher-yield side; a growth-focused, long-horizon investor weights toward the broader one.
These are descriptive profiles, not recommendations. What fits you depends on your goals, horizon, and what you already own. Walnut is not an investment adviser.
Before you buy: do you already own this?
The overlap that decides most ETF purchases is not between IWM and VOO, it is with what you already hold. ETF redundancy is invisible without looking through to the underlying holdings: you can already own most of IWM inside a broad fund like an S&P 500 or total-market ETF and not realize it.
This is the part a generic comparison cannot answer, because it depends on your account. Connect your brokerage and Walnut looks through your funds to show your real, combined exposure, flags how much of IWM or VOO you already own elsewhere, and tells you whether adding either just buys the same companies twice, read-only by default, with your login staying at your broker. Walnut is not an investment adviser.
What is IWM?
Tracks the Russell 2000 Index, the standard benchmark for US small-cap equity, holding roughly 2,000 smaller companies. More domestically focused and historically more volatile than large-cap funds, with no single name dominating. Used as a small-cap sleeve alongside a large-cap core. Verify current figures on the issuer's site.
What is VOO?
Tracks the S&P 500 Index, the standard measure of US large-cap equity. Effectively identical exposure to SPY and IVV at a 0.03% expense ratio. Used as a core building block in most diversified portfolios.
IWM or VOO: which should you pick?
These are complements, not rivals. Most investors hold the broader or lower-risk fund as a larger core and use the narrower or higher-yield one as a smaller satellite sized to the role they want it to play, rather than picking one and dropping the other. Decide the split deliberately.
IWM vs VOO: the full fund facts
| IWM | VOO | |
|---|---|---|
| Fund | iShares Russell 2000 ETF | Vanguard S&P 500 ETF |
| Tracks | Russell 2000 | S&P 500 |
| Expense ratio | 0.19% | 0.03% |
| Dividend yield | ~1.2% | ~1.0% |
| AUM | ~$70 billion | ~$1.7 trillion |
| Top holding | IWM | NVDA |
| Issuer | iShares (BlackRock) | Vanguard |
Approximate as of early 2026; verify with each issuer.
iShares (BlackRock) is the largest ETF issuer, with deep liquidity across its range. Vanguard is investor-owned and known for rock-bottom fees.
The bottom line: IWM vs VOO
IWM and VOO are different exposures, so the question is how much of each, not which is better. Either way, the decisive check is overlap with your real portfolio. Walnut can show that before you buy. It is not an investment adviser.
Wondering how IWM or VOO fits the portfolio you already own? Walnut is an AI investing app that connects your brokerage read-only and answers questions like that about your actual holdings: overlap, concentration, and how each position tracks the S&P 500. Compare the best AI portfolio analyzers or see the best AI investing apps in 2026.
Investing in IWM with AI
Walnut connects your real brokerage so you can see how IWM and VOO overlap with what you already own, analyze either by chatting through Claude or ChatGPT, and place any trade yourself.
FAQ
What is the difference between IWM and VOO?
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IWM tracks Russell 2000 (0.19%); VOO tracks S&P 500 (0.03%). They give you genuinely different exposure, so the choice is how much of each to hold, not which is better.
Do IWM and VOO hold the same stocks?
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Their top holdings barely overlap. They are more complementary than redundant. This reflects top holdings, not the full constituent lists; verify with each issuer.
Is IWM or VOO cheaper?
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IWM charges 0.19% and VOO charges 0.03% as of early 2026, so VOO keeps a little more of your return each year. On a $10,000 holding that is about $19 vs $3 a year.
Should you own both IWM and VOO?
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It can make sense if you want both roles, but check the overlap first so you are not paying two fees for one bet. Walnut can show the real overlap, and the overlap with what you already own, before you buy.
Which has a higher dividend yield, IWM or VOO?
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IWM yields about ~1.2% and VOO about ~1.0% (early 2026, approximate). IWM pays more today. For most long-term investors total return and cost matter more than the headline yield.
How much do IWM and VOO overlap?
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By top holdings, IWM and VOO overlap roughly 0% by weight with few shared top names. That is modest overlap, so they are more complementary than redundant. This uses top holdings as a proxy for the full funds; confirm with each issuer.
IWM vs VOO: which is better?
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They are different exposures, so "better" is the wrong frame: the useful question is how much of each fits your portfolio, not which one to pick. Walnut is not an investment adviser.
Which is better for a long-term investor, IWM or VOO?
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Long-term investors often hold the broader, steadier fund as a core and size the narrower or higher-yield one to the role they want it to play, rather than choosing only one. Figures are approximate as of early 2026.
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Walnut is informational, not investment advice. ETF figures are approximations stamped to early 2026; verify current data with each issuer before deciding. Nothing here is a recommendation.