ETF (exchange-traded fund)
A fund you buy and sell on the stock market like a share, which holds many investments at once.
Buying all 500 companies in the S&P 500 one by one would be very expensive. An ETF (exchange-traded fund) does it for you: you buy a piece of the fund and the fund owns all the companies.
ETFs charge an annual fee. It looks small, but it compounds: $10,000 in the US market since September 1996 would be $202,714 today with a 0.03% fee, VOO's, and $151,317 with a 1% fee. The difference is $51,397.
The annual fee (expense ratio) is taken out of the fund's value every day, so it never shows up as a separate charge: the return is simply lower.
VOO, Vanguard's ETF that tracks the S&P 500, charges 0.03% a year. At Compass, “S&P 500” means VOO: the historical series already deducts that fee. The 1% example takes off a further 0.97% a year, spread across each month.
In the US there have also been bitcoin and ethereum ETFs since 2024: the fund holds the asset on behalf of the people who buy it.
- 0.03% fee
- 1% fee
Same real returns; only the annual fee changes.
Where you see it in Compass
- Simulator · ExploreIn the Simulator, “S&P 500” means the VOO ETF.
Related terms
Frequently asked questions
What's the difference between an ETF and a stock?
A stock is a piece of a single company. An ETF is a piece of a fund that holds many investments at once, and you buy and sell it just like a stock.
Does an ETF's fee matter much?
Yes, because it compounds year after year. Over 30 years, going from 0.03% to 1% would have meant $51,397 less on $10,000.
Calculated and reviewed by Compass. Sources, checks and method
Figures with data as of October 26, 2026. Educational content. Not financial advice. Past results don't guarantee future results.