Vanguard's S&P 500 ETF Hits $100 Billion Inflows In 2024: Is SPY's Crown At Risk?

The Vanguard S&P 500 ETF VOO has shattered records, crossing $100 billion in annual inflows this year, a historic high for any ETF over the same period.

Data from ETF.com shows that the fund witnessed $101.07 billion in fresh money from investors, more than the combined inflows of its two closest competitors: iShares Core S&P 500 ETF IVV with $59.2 billion and SPDR S&P 500 ETF Trust SPY with just $22.9 billion. 

In the multi-trillion-dollar exchange-traded fund industry, this trend is sparking debate over whether SPY, the world's largest ETF, is now on the brink of losing its long-standing crown.

$VOO Poised To Become The World’s Largest ETF Next Year

Despite SPY still holding the title of the world's largest ETF, with $620 billion in assets under management (AUM), the gap between it and VOO — currently at $579 billion — has narrowed to $41 billion.

“That means that there is a very real possibility that VOO overtakes SPY as the world's largest ETF as soon as next year,” commented Sumit Roy, senior analyst at ETF.com.

“But even if that happens, SPY's slide down the ETF leaderboard might not stop there. IVV is also nipping at its heels, with $565 billion in AUM,” he added.

World’s 10 Largest ETFs by AUM

ETF Name	AUM ($ bn)	Expense ratio
SPDR S&P 500 ETF TRUST	620.26	0.09%
Vanguard S&P 500 ETF	579.35	0.03%
iShares Core S&P 500 ETF	559.64	0.03%
Vanguard Total Stock Market VTI	460.11	0.03%
Invesco QQQ Trust, Series 1 QQQ	310.27	0.20%
Vanguard Growth ETF VUG	151.13	0.04%
Vanguard FTSE Developed Markets ETF VEA	135.42	0.06%
Vanguard Value ETF VTV	133.31	0.04%
Vanguard Total Bond Market BND	119.17	0.03%

Expense Ratio: A Critical Factor For VOO’s Institutional Inflows

A key driver of VOO's success is its rock-bottom expense ratio of 0.03%, less than a third of SPY's 0.0945%.

These differences have significant implications, especially for institutional investors managing billions.

A retail investor putting $5,000 into VOO at the start of the year would pay only $1.50 in annual expenses, while the same investment in SPY would cost $4.73 – basically an irrelevant difference.

In sharp contrast, an institutional investor allocating $5 billion to VOO would pay just $1.5 million in fees, compared to $4.73 million with SPY—a staggering $3.23 million difference.

This simple example may explain that expense ratio differences are a huge driver of wholesale investor flows into ETFs.

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