SPY vs TAXF
State Street SPDR S&P 500 ETF Trust vs American Century Diversified Municipal Bond ETF
Quick Verdict
SPY has a lower expense ratio. SPY delivered stronger 1-year returns. TAXF offers more diversification with 785 holdings.
Side-by-Side Comparison
| Metric | SPY | TAXF | Winner |
|---|---|---|---|
| Expense Ratio | 0.09% | 0.25% | |
| AUM | $821.1B | $686M | |
| Dividend Yield | 1.01% | 3.84% | |
| Holdings | 505 | 785 | |
| YTD Return | +12.68% | +0.81% | |
| 1Y Return | +21.82% | +6.01% | |
| 3Y Return (annualized) | +21.98% | +4.01% | |
| 5Y Return (annualized) | +12.89% | +0.72% | |
| Volatility (annualized) | 15.3% | 6.0% | |
| Max Drawdown | -56.5% | -13.9% | |
| Fund Family | State Street Investment Management | American Century Investments | |
| Category | Equity | Tax Preferred | |
| Inception | Jan 22, 1993 | Sep 10, 2018 |
SPY vs TAXF Performance
State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management and American Century Diversified Municipal Bond ETF (TAXF) is a ETF from American Century Investments. Over the past year SPY returned +21.82% while TAXF returned +6.01%. Year to date, SPY is up 12.68% versus a gain of 0.81% for TAXF.
Over three years, SPY compounded at +21.98% per year against +4.01% for TAXF; over five years the annualized figures are +12.89% and +0.72% respectively. Across the full 8-year window we track, SPY has the edge at +8.81% annualized vs +1.91%. 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 6.0% for TAXF. 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 -13.9% for TAXF. 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 0.52. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
SPY charges 0.09% per year while TAXF charges 0.25%. On a $10,000 position that is $9 vs $25 annually, a gap of $16 per year that compounds over a long holding period. On income, SPY currently yields 1.01% against 3.84% for TAXF.
Holdings Overlap
SPY and TAXF share 0 holdings out of 995 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 TAXF?
SPY has an expense ratio of 0.09% while TAXF charges 0.25%. SPY is the cheaper option. On a $10,000 investment, that is $16 per year of difference.
Which performed better, SPY or TAXF?
Over the past year SPY returned +21.82% vs +6.01% for TAXF, so SPY leads on 1-year performance. Over the longest common window we track (8 years), SPY annualized +8.81% vs +1.91% for TAXF. Past performance does not guarantee future results.
Which is riskier, SPY or TAXF?
SPY has been the more volatile fund at 15.3% annualized versus 6.0% for TAXF. Worst drawdown: SPY -56.5% vs TAXF -13.9%.
Should I hold both SPY and TAXF?
SPY and TAXF have a monthly-return correlation of 0.52, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between SPY and TAXF?
SPY and TAXF share 0 common holdings with a 0.0% weight overlap. Combined, they hold 995 unique securities.
Which pays a higher dividend, SPY or TAXF?
SPY yields 1.01% while TAXF yields 3.84%, so TAXF currently pays the higher dividend yield.
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