IVV’s Shot to Become World’s Biggest ETF Nears
VOO, IVV and SPY battle it out for the top ETF spot amid tumultuous markets.
As markets hit a 10% correction earlier this year, the Vanguard S&P 500 ETF (VOO) became the world’s largest ETF, replacing the SPDR S&P 500 ETF Trust (SPY) from a position it had held nearly nonstop since its introduction as the first U.S.-listed exchange-traded fund in 1993.
Then, just weeks later, the iShares Core S&P 500 ETF (IVV) bumped SPY down to third place.
Those who watch this kind of horse race may wonder what’s going on among the three largest ETFs, which combined hold $1.7 trillion in assets.
All three track the S&P 500 index, meaning they perform nearly identically. Still, SPY’s 4% drop through April 1, perhaps due to its structure as a unit investment trust, requiring it hold dividends in cash until distribution, is a hair more than the 3.9% drop experienced by the others.
Does that performance explain why investors have pumped $35.2 billion into VOO so far this year and yanked $26.6 billion from SPY? Why has IVV pulled in $23.5 billion over the same period?
IVV Inflows Crush All
Also worth noting is that in the past month, IVV’s flows have crushed them all, which is why it’s getting its shot at the top spot. The BlackRock Inc. (BLK) fund has pulled in $23.6 billion, triple VOO’s $6.7 billion. Meanwhile, SPY has bled out $27.6 billion.
Source: etf.com data
SPY has long been popular with institutional investors and active traders due to its liquidity, said etf.com Senior Content Editor Kent Thune, CFP. As the flagship of State Street’s ETF lineup, it’s long enjoyed first-mover advantages. Still, its management fee of 0.09%, triple that of VOO and IVV, may be contributing to it losing a notch or so in the rankings.
As markets roil this year, VOO and IVV are grabbing interest from individual investors and advisors seeking low-cost, long-term investment vehicles, Thune said.
“If the S&P 500 falls further, IVV will take the top AUM spot, as VOO investors continue to sell,” he said. "We'll know later if there are indirect impacts."
The race has no end, and the claim to the world’s biggest ETF will be fleeting.
