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NVIDIA Corporation (NVDA) - free report >>
SPDR S&P 500 ETF (SPY) - free report >>
Vanguard S&P 500 ETF (VOO) - free report >>
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ETF Investors Crown a New King
The Vanguard S&P 500 ETF (VOO - Free Report) has dethroned State Street's SPDR S&P 500 ETF (SPY - Free Report) as the largest ETF in the world. VOO now boasts approximately $632 billion in assets, according to Bloomberg data, surpassing SPY’s $630 billion.
SPY, the first U.S.-listed ETF, held the crown as the largest ETF for over three decades. It remains the most traded and most liquid ETF globally, favored by professional traders for its immense liquidity and ultra-tight spreads.
However, with an expense ratio of 0.0945%, SPY is the most expensive of the ETFs tracking the S&P 500 index. In contrast, VOO and BlackRock’s iShares Core S&P 500 ETF (IVV - Free Report) charge an expense ratio of 0.03%, while the SPDR Portfolio S&P 500 ETF (SPLG - Free Report) is even cheaper, with a fee of just 0.02%.
Rock-bottom fees have been instrumental in attracting cost-conscious retail investors and advisors to VOO, IVV, and SPLG. VOO broke the record for annual inflows last year, gaining $116 billion, and continues to attract billions in assets this year.
All these ETFs have benefited from the exceptional performance of U.S. large-cap stocks, particularly NVIDIA (NVDA - Free Report) , which accounts for about 7% of VOO’s portfolio. Over the past two years, the S&P 500 has posted annual gains exceeding 20%, driving massive inflows into these funds.
The Vanguard Effect
Vanguard founder Jack Bogle, the creator of the first index fund for individual investors, established the firm's unique ownership structure, which passes along profits to reduce investment costs for clients.
Unlike other fund management companies, which are owned by public or private stockholders, Vanguard’s investors are also its owners.
Earlier this month, Vanguard announced its largest-ever fee reduction, expected to save investors more than $350 million this year alone. The firm lowered expense ratios on 168 share classes across 87 funds.
Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence and author of “The Bogle Effect: How John Bogle and Vanguard Turned Wall Street Inside Out and Saved Investors Trillions,” told me on my podcast that VOO could remain the ETF king for a very long time.
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