To The Moon

According to Morningstar Direct, $SPDR S&P 500 ETF Trust(SPY)$, the very first ETF, best known by its symbol SPY, is on track to lose its position as the world's largest ETF.

Below are 3 challengers, gunning after SPY’s throne.

Challenger: $Vanguard S&P 500 ETF(VOO)$

• Launched in 2001, VOO has rapidly gained popularity.

• There is a high probability of it surpassing its 17 years senior counterpart - SPY.

• With a lower expense ratio of 0.03% annually, compared to SPY's 0.095%, VOO has attracted significant inflows.

• In 2024 alone, VOO has garnered over $103 billion in assets under management (AUM).

• More importantly, Morningstar Direct is quite confident that this ETF will overtake SPY as the world’s largest ETF, come 2025.

• The conclusion is arrived at after calculating the amount of inflow to VOO and that it is less than $42 billion or 7% — behind SPY.

• Another shot in the arm for confidence in this ETF is — even Mr Buffett owns a big chunk of VOO, in addition to SPY in $Berkshire Hathaway(BRK.B)$ portfolio.

Other Challengers.

(1) $iShares Core S&P 500 ETF(IVV)$.

• Another strong contender is IVV with $569.2 billion in AUM.

(2) $SPDR Portfolio S&P 500 ETF(SPLG)$.

• State Street Global Advisors, creator of the SPDR family of funds, has also launched its own low-cost S&P 500 ETF - the SPLG.

• With an even lower expense ratio of 0.02% annually.

• As a result, SPLG has attracted $18 billion in investments in 2024.

• What’s more, this ETF also attempts to pay quarterly dividend before the end of the quarter, that some investors may find appealing.

• However, with its AUM at $52.6 billion, it is still miles behind SPY and VOO.

• What is ‘funny’ to me is that SPLG is pitted against SPY as well. Wouldn’t that amount to cannibalism of its own kind ? Ha, ha, ha.

SPY Legacy.

Despite the growing competition, SPY remains a popular choice for many investors.

• Its high trading volume and liquidity make it a preferred option for large institutional investors. Comparatively speaking, its daily average volume is 46.5 million, or +730% higher than VOO.

• Additionally, SPY still accounts for roughly 20% of US ETF trading volume. Surely that should mean something no ?

• You maybe interested to know that it trades more than $Apple(AAPL)$ & many other securities and remains a "goto” ETF for a variety of reasons. What will yours be ?

However, as investors increasingly prioritize low-cost options, the future of SPY's dominance remains uncertain.

ETF’s Bright Horizon.

The rise of low-cost index funds has been a significant boon for investors.

By reducing fees, these funds allow investors to retain more of their returns over the long term.

As the competition among ETF providers intensifies, investors can expect even lower fees and more innovative products in the future.

My viewpoints (mine only):

Initially, I wanted to provide a YTD performance on each of the ETF for comparison purpose.

However, after I have collected the information - I laughed loudly at myself. It was a eureka moment !

Do you know why ? (see below)

The 4 ETFs (SPY, VOO, IVV, and SPLG) track the same S&P 500 index.

• This means they invest in the same 500 large-cap US stocks.

• As a result, their performance will be very similar over the long term.

• If you look closely at the ETF movements, they are identical.

This brings me to notice next - the ETF prices are quite varied, with SPLG being the most ‘modest’ and IVV the most ‘expensive’. All for the same S&P 500 index ?

I can understand why SPLG is the ‘cheapest’ of the lot, due mainly to its AUM principal.

For IVV, what are really its differentiating factors that makes it more ‘attractive’ compared to SPY and VOO ? Will leave it to potential IVV investors to dig and find out more..

With US market clocking new ATH (all time highs) lately, is now is the “time” to buy index ETFs, given that a new party is about to run America for the next 4 years. Personally, I will monitor for a wee longer.

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• Do you think SPLG is a better bargain than SPY, VOO and IVV ?

• Do you think ETFs is the way to go for a more secure & less volatile investment in US stock market?

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