Vanguard became the world’s largest ETF at the start of this week, marking a milestone in an industry valued at $11 trillion, according to a statement from the firm.
According to figures from the asset manager, financial agencies, and the market, Vanguard’s S&P 500 ETF (NASDAQ: VOO) now manages nearly $632 billion in assets, after recording approximately $23 billion in inflows so far this year.
The increase in inflows pushed VOO above the SPDR S&P 500 ETF Trust—commonly known in the market as SPY—which lost its title as the world’s largest ETF, now managing around $630 billion in assets.
Nonetheless, the competition between the two funds remains very close. While SPY is no longer the largest ETF in terms of assets, it remains highly valued by asset management professionals for its ease of trading and low costs, features that allow fund managers to enter and exit the market quickly.
SPY was launched in 1993 by the U.S. stock exchange and State Street Global Advisors, making it one of the longest-running ETFs still in operation today. This fund has long benefited from a significant first-mover advantage in terms of size and trading volume. Now, with its rapid growth, Vanguard has surpassed SPY, marking a new chapter in the global ETF industry.
The scale of operations in both funds is enormous, although SPY continues to set the standard in this segment. According to Bloomberg data, over the past twelve months, SPY has averaged daily trading volumes of $29 billion—the highest for any ETF. In contrast, Vanguard’s VOO averaged $2.8 billion in daily trades.
Vanguard’s alternative emerged in 2010 and immediately experienced rapid growth, thanks to the firm’s reputation and loyal following among investors. This includes financial advisors looking to boost their commissions. Over the past twelve months, VOO has attracted more than $116 billion, setting a record for annual inflows.
The appeal of the index-based fund highlights the profile of Vanguard’s core clients, such as cost-conscious financial advisors and retail investors with a long-term investment focus.
The “buy-and-hold” strategy has been a key differentiator between the two ETF giants. While VOO investors favor this approach, SPY is valued by professional traders for its high liquidity and narrow spreads. However, its higher trading volume often results in significant flows in both directions (inflows and outflows).
Analysts highlight a key fact: VOO has never experienced an annual net outflow since its launch in 2010, whereas SPY has recorded net withdrawals in five years over the same period.
