State Street Europe S&P 500 ETF Hits $10B After Fee Cut

State Street Global Advisors’ S&P 500 ETF has doubled in size since it slashed its fees late last year, just as its flagship U.S. fund reaches a half-trillion dollars in assets.

The SPDR S&P 500 UCITS (SPY5) now holds more than $10.3 billion in assets under management (AUM), growing from just over $5bn since it reduced its fee from 0.09% to 0.03% on 23 October.

SPY5 has seen $4.2 billion in the four months to Feb. 23, according to data from Morningstar Direct, with the remaining AUM coming from market gains.

The flagship US index is up 21% over the same period an impressive run that saw it hit an all-time high at the end of January. SPDR S&P 500 ETF Trust (SPY) became the first ETF in history to hit a half-trillion dollars in assets under management on Thursday.

SPY Surges in Europe and U.S.

SPY, which gives investors exposure to some of U.S.'s largest companies through a market cap weighted tracking of the S&P 500 index, reached $502 billion in AUM shortly before U.S. markets closed on Friday, State Street Corp., the issuer of the fund said. The fund currently has $499 billion in assets.

The fund, which started trading in 1993, has been the world's largest for AUM and a long-time golden goose of State Street, the world's third largest ETF issuer. 

The S&P 500 has continued its rally, gaining 2.1% on Feb. 22 following chip giant Nvidia’s blockbuster earnings, its best day since January 2023.

Even without the gains, SSGA’s fee cut has succeeded in peaking investor interest in the ETF as it booked $1.2 billion inflows in the month after it reduced the total expense ratio (TER).

The move saw the U.S. giant undercut its rivals to offer the cheapest S&P 500 ETF in Europe, pricing it below the Invesco S&P 500 UCITS ETF (SPXS) which has a TER of 0.05%.

SSGA incorporated SPY5 into its securities lending program—along with 66 other ETFs—in a bid to make the move more economically viable.

Despite the move, investors have been quick to point out the need to consider the total cost of ownership when selecting ETFs, taking into account factors such as liquidity, spreads, tracking error and replication methodology.