SPYM's 0.0002% fee costs roughly two cents annually on $10,000, but the kiddie tax on custodial account gains can quietly drain thousands over 18 years. VOO and IVV mirror SPYM's S&P 500 exposure at nearly identical cost, but a 529 wrapper delivers tax-free growth and keeps parents in control until college. SPYM's 'diversified' label obscures reality, given that NVIDIA, Apple, and Microsoft alone command over 19% of your newborn's default portfolio.
It sounds nuts, but SoFi1 is giving new Active Invest users up to $3,000 in stock for a limited time, and all it takes is a $50 deposit to get started.2 See for yourself (Sponsor) Your newborn just got a government-seeded investment account, and the default S&P 500 ETF sitting inside it charges 0.02% a year. On $10,000, that is roughly two dollars in annual fund fees. So where is the hidden cost?
It hides in everything the Trump Account quietly decides on your behalf: the account type, the tax treatment, and the concentration inside the S&P 500 wrapper itself. Let's start with the headline fee. The State Street SPDR Portfolio S&P 500 ETF (NYSEARCA:SPYM) carries a net expense ratio of 0.02% as of March 31, 2026.
The comparable fund from Vanguard S&P 500 ETF (NYSEARCA:VOO) has an expense ratio of 0.03% as of March 25, 2026. At those levels, fees have a minimal impact on long-term returns. Even compounded over an 18-year holding period, the difference between the two funds is unlikely to materially affect an investor's performance.
The real costs come from the account itself. Trump Accounts are custodial-style vehicles funded in the child's name. That means every dividend SPYM distributes (and capital gains when shares are sold) can hit the child's tax return under the "kiddie tax" regime.
Compare that to a 529 plan, where everything the 529 earns is tax-free when spent on qualified education. On a portfolio growing at S&P 500-like rates, that difference in tax treatment can quietly siphon thousands over 18 years, dwarfing the ETF's minimal expense ratio. SoFi Active Invest is offering a limited-time promotion.
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