Vanguard S&P 500 ETF (VOO) Dethrones SPDR S&P 500 ETF Trust (SPY) as World’s Largest ETF

Vanguard S&P 500 ETF (VOO) Surpasses SPDR S&P 500 ETF Trust (SPY) as World’s Largest ETF

The title of the world’s largest exchange-traded fund (ETF) has shifted from the SPDR S&P 500 ETF Trust (SPY) to the Vanguard S&P 500 ETF (VOO). VOO, with assets totaling $631.8 billion, surpassed SPY by approximately $1.5 billion, marking the end of a months-long race for the top spot in the $10.7 trillion ETF market.

Vanguard’s recent success can be attributed to its $121.1 billion in net inflows last year, nearly five times the $23.6 billion taken in by SPY. Vanguard’s overall performance has been impressive, with $36 billion in January inflows alone, representing 40% of the $90 billion that went into ETFs last month. In contrast, State Street Global Advisors, which launched SPY in 1993, experienced $11.3 billion in net outflows in January.

Despite SPY’s loss of its crown, it remains a popular choice for options traders and sophisticated investors due to its liquidity and 9 basis points charge. VOO, on the other hand, appeals to investors seeking low-cost broad market index exposure, charging just 3 basis points.

Vanguard’s recent fee cuts to more than half of its ETF lineup have contributed to its success, but the company faces challenges as investor appetite shifts toward active strategies. Vanguard’s lack of cryptocurrency ETFs also sets it apart from other issuers.

Rodney Gomegys, Global Head of Equity Investment Group at Vanguard, credits the company’s success to its “unmatched focus on the best interests of our investors.” He notes that the market environment has been favorable to large-cap U.S. equities, contributing to continued enthusiasm for S&P 500 ETFs and other large-cap strategies across the industry.