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Vanguard Group’s Standard & Poor’s 500 ETF (NYSE:VOO) is on the brink of surpassing the SPDR S&P 500 (NYSE:SPY) Trust (NYSE:SGX:SPY) managed by State Street (NYSE:STT) Global Advisors to become the world’s largest exchange-traded fund.
The latest data from FactSet and other sources indicate that the Vanguard ETF, with $631.8 billion in assets, is closing in on the State Street fund’s $633.1 billion.
The State Street ETF has held the title of the largest U.S. stock ETF since its inception in 1993 and is favored by hedge funds and traders for its liquidity and tight trading spreads. However, the Vanguard ETF, which launched in 2010 with lower fees, has gained popularity among financial advisors and retail investors looking to minimize costs.
Citi Research analysts have observed significant movements in the ETF market, with the SPDR ETF experiencing $19.4 billion in outflows in January, which amounted to 25.7% of all U.S. equity ETF outflows. In contrast, the Vanguard ETF attracted 12.9% of all inflows, totaling $21.3 billion for the month.
According to Reuters, ETF industry has seen considerable shifts, with the top three U.S. firms—BlackRock, Vanguard, and State Street—facing competition from newer entrants. Anna Paglia, now executive vice president and chief business officer at State Street, commented on the increasing battle for market share within the industry.
Despite the outflows from SPY, Paglia emphasized that the fund continues to grow due to its status as the most traded ETF globally. She also noted that the outflows at the beginning of the year are typical and highlighted the robust inflows into the SPDR Portfolio S&P 500 ETF (NYSE:SPLG), a retail-focused "mini" version of SPY, which drew $3.2 billion in January alone.
Todd Rosenbluth, head of research at VettaFi, acknowledged that while State Street remains influential in the ETF space, Vanguard’s ETF might have finally overtaken its rival, underscoring the distinct offerings of the two products.
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