Vanguard has won! The "world's largest ETF" title changes hands, VOO is unstoppable and will soon surpass SPY

Wallstreetcn
2025.01.26 03:40
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Vanguard's S&P 500 ETF (VOO) attracted nearly $18 billion in inflows at the beginning of 2025, with assets reaching $626 billion, and is expected to surpass State Street's SPDR S&P 500 ETF Trust (SPY). The success of VOO is attributed to its low fees (annual fee rate of 0.03%) and stable customer base. Although SPY remains popular among professional traders, VOO has high investor stickiness and has not experienced any annual net outflows since its inception in 2010. BlackRock's iShares Core S&P 500 ETF (IVV) is also in the competition, with assets reaching $610 billion

Vanguard's S&P 500 ETF (VOO) is rising at an astonishing pace.

In just a few days at the start of 2025, Vanguard VOO attracted nearly $18 billion in inflows, more than five times that of the second-place fund. This continues the momentum from 2024, when VOO recorded a record annual inflow of $116 billion.

Currently, VOO's asset size has reached $626 billion, soon to surpass the current largest ETF in the world—State Street's SPDR S&P 500 ETF Trust (SPY), which has an asset size of $637 billion.

The success of VOO is mainly attributed to two factors. First, its extremely low fees. VOO's annual fee rate is only 0.03%, far lower than SPY's 0.095%.

Second, VOO has a stable customer base. Vanguard's core clients are cost-conscious financial advisors and retail investors. These long-term investors typically continue to invest funds and rarely redeem. Bloomberg ETF analyst Eric Balchunas stated:

"VOO has won the favor of retail investors. VOO's investor stickiness is extremely high, and their 'diamond hands' would make any cryptocurrency investor feel ashamed."

Despite lagging in asset size, SPY remains popular among professional traders, mainly due to its high liquidity and very small bid-ask spread. However, this advantage also leads to more frequent inflows and outflows for SPY. Data shows that since its inception in 2010, VOO has never experienced an annual net outflow, while SPY has had net outflows in five years during that period.

In addition to the competition between VOO and SPY, BlackRock's iShares Core S&P 500 ETF (IVV) cannot be overlooked. IVV currently has an asset size of $610 billion and attracted nearly $87 billion in inflows in 2024 alone. IVV's fee rate is currently on par with VOO, both at 0.03%.

TMX VettaFi's research director Todd Rosenbluth predicts:

"IVV's asset size may soon surpass SPY. We believe BlackRock may adopt a more aggressive pricing strategy for IVV. Competing to be the king of the ETF market is worth striving for."

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