Your ETF Checklist (7 points to check before you buy)
How to compare two ETFs properly: fees, tracking difference, liquidity, structure, issuer and tax. A 7 point checklist, with SPY, VOO and IVV as the worked example.
Your ETF Checklist (7 points to check before you buy)
Every ETF comparison you find online stops at the fee. That misses almost everything that separates 2 funds which look interchangeable on a screener. This report gives you the 7 things to check on any ETF, anywhere, before you decide. The worked examples are SPY, VOO and IVV, 3 funds that hold the same 500 companies at 3 very different price tags, but the checklist itself applies to any ETF you are looking at.
3 funds, 1 index
3 funds. The same 500 companies. The same index, tracked the same way.
1 of them costs 3 times more than the other 2.
Most people comparing ETFs stop at the fee, decide the cheap one wins, and move on. That is not wrong exactly, but it skips almost everything that actually separates 1 fund from another. And there is a defensible reason someone might still pick the expensive one.
Flip the cards, then let us go through what you should actually be checking.
Those 3 are the worked examples for the rest of this report, because they strip out every variable except structure. Same index, same holdings, same returns. Everything that differs between them is the thing you would otherwise never look at. The checklist works the same way on any 2 ETFs you are weighing up.
The 7 checks
This is the whole report in 1 list. Each check gets its own section below, with the 3 funds run through it. Come back to this list when you are working through your own 2 funds.
- 1What it actually holdsIndex, weighting method, top 10 concentration
- 2The feeExpense ratio, and what it compounds to over your horizon
- 3Tracking differenceFund return against index return, same periods, every fund
- 4LiquidityAssets, daily volume, spread, and the liquidity of the holdings
- 5StructureLegal wrapper, physical or synthetic, distributing or accumulating
- 6Issuer and fund ageWho runs it, how long it has run, how much is in it
- 7Tax and where you hold itTreatment in the account you would actually use
What an ETF actually is
An ETF is a basket of shares that trades like a single share. Buy 1 unit of an S&P 500 ETF and you own a sliver of all 500 companies in the index, in roughly the proportions the index holds them.
The part worth understanding properly is why the price of that basket stays close to the value of what is inside it. That is not luck or good behaviour. It is a mechanism.
You buy on the exchange
You buy units of the fund from another investor, the same way you buy a share. Nothing happens inside the fund itself. If lots of people do this at once, demand for the units rises.
Plain English: authorised participant
A large financial institution with permission to create and cancel units of the fund directly with the fund manager. There are usually several per fund, and they compete with each other, which is what keeps the process quick and the pricing tight.
This matters for the rest of the report. Creation and redemption is why an ETF holding liquid shares stays liquid even when barely anyone trades it, and it is why the gap between the price you pay and the price you sell at is usually tiny.
What it actually holds
Start with the obvious question that people skip: what is in it.
2 funds can sound almost identical and hold very different things. An S&P 500 fund and a Nasdaq 100 fund both get described as US large cap and tech heavy. They are not the same investment. Different number of companies, different eligibility rules, different concentration in the largest handful of names.
Roughly 39% of the S&P 500 sits in just its 10 largest companies, across around 500 holdings in total. Source: index and fund holdings data, May 2026.
Toggle the bar and look at how much of each index sits in just the top 10 holdings. If that number surprises you, that is the point. You may already own more of a small number of companies than you realised, through funds you think of as diversified.
Check the index the fund tracks, how that index picks its members, and how much sits at the top. Then compare like with like.