Vanguard’s VOO ETF Closing in on SPY’s Long-Standing Crown

Vanguard’s S&P 500 ETF (VOO) is on track to become the largest exchange-traded fund (ETF) in the world, potentially overtaking State Street’s SPDR S&P 500 ETF Trust (SPY) after years of leading the market. In 2025 alone, VOO has attracted nearly $18 billion, following a remarkable $116 billion in inflows last year. Currently, VOO has amassed $626 billion in assets, bringing it closer to SPY’s $637 billion — a sign of changing dynamics in the ETF industry.

Market Overview:

• In 2025, VOO’s inflows totaled $18 billion, raising its assets to $626 billion.
• SPY remains the largest ETF globally with $637 billion but is facing new challengers.
• iShares Core S&P 500 ETF (IVV) is gaining momentum, with assets reaching $610 billion.

Key Points:

• Vanguard’s VOO charges a low fee of 0.03%, significantly lower than SPY’s 0.095% expense ratio.
• While VOO caters to retail investors and advisers, SPY is favored by active traders.
• BlackRock’s IVV is a strong contender, having seen $87 billion in inflows during 2024.

Looking Ahead:

• Continued inflows may enable VOO to surpass SPY, emphasizing the preference for low-cost, diversified funds.
• If BlackRock employs more competitive pricing, IVV may also challenge both SPY and VOO.
• The ETF market is highly competitive, driven by investor demand for low fees and high liquidity.

Bull Case:

• With $18 billion in 2025 and $116 billion in 2024 inflows, VOO is well-poised to overtake SPY as the largest ETF worldwide.
• Vanguard’s extremely low expense ratio of 0.03% makes VOO appealing for long-term investors seeking cost-effective market returns.
• In contrast to SPY, which faces frequent withdrawals due to trading activity, VOO has not recorded an annual outflow since its launch in 2010, highlighting its steady growth.
• The rise of ETF model portfolios, which assemble funds like VOO into convenient strategies, is fueling its popularity among investors.
• VOO’s consistent inflows exemplify a wider shift toward affordable, diversified funds in the competitive ETF market.

Bear Case:

• SPY’s established presence among professional traders helps it maintain considerable liquidity and trading volume, complicating VOO’s effort to fully take its place.
• BlackRock’s IVV, with $610 billion in assets and a competitive expense ratio of 0.03%, represents a significant threat to VOO and SPY, especially if pricing strategies become more aggressive.
• The ETF market’s competitiveness means that factors such as liquidity and trading flexibility could restrict VOO’s capability to attract institutional investments away from SPY.
• VOO’s dependence on passive strategies might expose it to higher risks during market downturns compared to actively managed alternatives or ETFs with diverse weighting approaches.
• External factors like market volatility or regulatory changes could disrupt inflow patterns into low-cost ETFs like VOO, impacting Vanguard’s growth prospects.

Industry analysts highlight BlackRock’s iShares Core S&P 500 ETF (IVV) as a formidable player, sitting at $610 billion after absorbing $87 billion in inflows in 2024. It offers a competitive fee of 0.03%, and further reductions could entice more investors. Todd Rosenbluth from TMX VettaFi underscores the strategic significance of leading the ETF market, a development that may lead to more competitive pricing in the future.

As ETF inflows continue to reshape the financial landscape, VOO’s sustained growth reflects a larger trend: investors are increasingly drawn to cost efficiency and accessibility. With major firms like Vanguard and BlackRock competing fiercely for top positions, the ETF market is set for exciting developments ahead.
This article was originally published on Quiver News, read the full story.

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