The SPDR S&P 500 ETF (SPY), once the undisputed leader in the U.S. exchange-traded fund market, is facing a serious challenge from Vanguard’s S&P 500 ETF (VOO). VOO has been gaining ground on SPY in recent years, thanks to its lower expense ratio of 0.03% compared to SPY’s 0.09%. In January 2025, VOO set a new record for monthly inflows, attracting $20.5 billion.
This extended VOO’s streak of consecutive monthly inflows to 26 months. In contrast, SPY suffered outflows of $10.68 billion, while BlackRock’s iShares Core S&P 500 ETF (IVV) lost $2.1 billion. As a result of these inflows, VOO’s assets under management have surged to $617 billion, closing in on SPY’s $630 billion.
If current trends continue, VOO could soon overtake SPY as the world’s largest ETF.
Spy faces growing competition from VOO
Investors are increasingly favoring VOO due to its lower costs and slightly better performance.
Since its inception in September 2010, VOO has gained 446%, compared to IVV’s 443% and SPY’s 442%. Over the past year, VOO has led all ETFs in inflows, attracting $127 billion. This is $50 billion more than IVV and significantly higher than SPY’s $30.2 billion inflows.
The shift in investor preferences towards lower-cost, higher-performing funds like VOO highlights a broader trend in the ETF market. As cost-conscious investors seek to maximize their returns, funds with lower expense ratios are likely to continue gaining market share. While SPY remains a popular choice for institutional investors and traders due to its liquidity, the rise of VOO and other low-cost alternatives is reshaping the competitive landscape in the trillion-dollar ETF industry.