The unstoppable flow of funds into Vanguard Group Inc.'s S&P 500 ETF (VOO, Financial) is poised to dethrone State Street's SPDR S&P 500 ETF Trust (SPY) as the largest ETF globally. Data indicates that nearly $18 billion has flowed into VOO in early 2025, more than five times the second-ranking fund. Last year, VOO set a record with $116 billion in annual inflows. Its assets have surged to $626 billion, nearing SPY's $637 billion.
VOO's appeal lies in its low-cost structure, attracting cost-conscious financial advisors and retail investors who contribute to stable fund inflows. Vanguard's unique company structure, where fund shareholders elect board members, ensures minimal product fees. Analyst Eric Balchunas highlights that VOO has won over retail investors, boasting the most loyal investor base.
In contrast, SPY is favored by professional traders for its liquidity and minimal spreads, although its high trading volume often leads to significant bidirectional trades. Since its inception in 2010, VOO has never experienced annual net outflows, unlike SPY, which saw outflows in five years during the same period. VOO charges an annual fee of 0.03%, compared to SPY's 0.095%.
Despite VOO's leading position, BlackRock's iShares Core S&P 500 ETF (IVV) is also close behind, with assets reaching $610 billion after attracting nearly $87 billion last year. IVV's fee matches VOO at 0.03%. Industry experts suggest BlackRock might adopt a more aggressive pricing strategy to compete for the top spot in the ETF market.
