From SPY to VOO, Big S&P 500 ETFs Topped 2023 Flows

From SPY to VOO, Big S&P 500 ETFs Topped 2023 Flows

A Vanguard report shows how investors piled into the S&P 500 last year.

Wealth Management Editor
Reviewed by: Staff
Edited by: James Rubin

Despite financial advisors' steady drumbeat about the importance of portfolio diversification, investors are still largely moving in lockstep in allocating to U.S. equities.

The latest ETF Perspectives report from the Vanguard Group, which analyzes ETF performance and asset flows, showed that investor reliance on the S&P 500 reached its highest level in more than a decade.

The report found that in a year in which the S&P gained more than 26%, the top four S&P 500 ETFs gathered 47% of all equity ETF flows in 2023. That’s the highest percentage since 2012, when the top S&P 500 ETFs attracted more than 50% of all equity ETF flows.

Vanguard's report suggested that the lopsided flows into the Vanguard S&P 500 ETF (VOO), the iShares Core S&P 500 ETF (IVV), the SPDR S&P 500 ETF Trust (SPY) and the SPDR Portfolio S&P 500 ETF (SPLG) represent a “fear of missing out on the 2023 rally and/or a short-term tactic to equitize cash before allocating more strategically in 2024.”

But the report also warned that "such an approach, which could involve a deviation from long-term allocations, should be entertained only with the greatest of caution." 

"It also highlights why investors should beware of exiting the market following downturns, as it increases the risk of missing subsequent rallies," the report added.

Investor Appetite for U.S. Equities

A more granular look at the flows into equity ETFs last year paints an even clearer picture of strong investor appetite for U.S. equities.

In the strong fourth quarter, for example, U.S. equity ETFs accounted for 86% of the $195 billion in total equity ETF inflows.

And funds tracking the S&P 500 Index represented nearly $80 billion of those fourth-quarter inflows.

“This trend was largely expected due to tax-loss harvesting activity, but the flows were higher than normal,” the report said.

Behind U.S. equities, which took in $168.1 billion during the fourth quarter, international equity ETFs accumulated $21.9 billion, nontraditional equity ETFs gathered $3.4 billion and equity sector ETFs took in $1.6 billion.

A further breakdown of the U.S. equity ETF flows during the fourth quarter shows large-cap value taking in $10.1 billion, large-growth taking in $21.6 billion and large growth-value blend ETFs taking in $110.7 billion.

That compares to inflows of $4.9 billion for all U.S. equity mid-cap ETFs, and $21 billion for all U.S. equity small-cap ETFs.

The fourth quarter story of domestic bias on the fixed income side was similar. 

Of the $69.2 billion worth of flows into bond ETFs during the quarter, $55.7 billion entered U.S. bond ETFs, $4.5 billion went into international and $9 billion went into municipals.

Overall, ETF industry assets increased by 13.2% in the fourth quarter to reach the $8.1 trillion mark, boosted by $266 billion worth of inflows and $682 billion worth of market appreciation.

Contact Jeff Benjamin at [email protected] and find him on X at @BenjiWriter     

Jeff Benjamin is the wealth management editor at, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.