ETF Watch: Second Fund Crosses $100B Asset Mark

Nearly 17 years into its existence, the SPDR S&P 500 ETF’s (SPY) lesser-known and cheaper twin has finally cracked the $100 billion mark in assets under management. The iShares Core S&P 500 ETF (IVV) crossed the milestone almost a decade after SPY did. It is only the second fund to do so.

Of course, SPY is the first-ever ETF and started trading in 1993, before IVV’s issuer even existed, so one-to-one comparisons may be unfair. SPY still dwarfs IVV, weighing in at nearly $241 billion, well over twice IVV’s AUM.

SPY’s continued dominance is a bit illogical and seems to be largely attributable to its first-to-market status. Sure, its liquidity can’t be beaten, with an average daily volume of $15 billion, but IVV’s no slacker, at an ADV of more than $700 million—it’s among the most liquid funds in the entire universe of U.S.-listed ETFs. More importantly to many—especially buy-and-hold investors—IVV is less than half of the cost of SPY, coming in at an expense ratio of 0.04% to SPY’s 0.09%.

At An Advantage?

One could even argue that IVV’s status as a 1940 Act fund gives it an advantage in that it can engage in securities lending, use derivatives and reinvest its dividends. But that also means the fund can introduce a certain amount of risk, unlike SPY, which is a unit investment trust and therefore has less latitude. Really though, when it comes to performance differences between the two funds, the results are a wash.

IVV was boosted to its current asset level in part by $808 million in inflows from the start of the month through Wednesday. By way of comparison, SPY saw inflows of more than $5 billion during the same period.

Notably, the Vanguard S&P 500 ETF (VOO), which is structured similarly to IVV and costs 0.05%, is a distant third in this race, with “just” $64 billion in AUM.    

Contact Heather Bell at [email protected].