On February 18, Vanguard Group's Standard & Poor's 500 ETF is poised to overtake State Street Global Advisors' SPDR S&P 500 Trust as the world's largest exchange-traded fund, according to data from FactSet, LSEG, and other sources.
As of the end of last Friday, State Street's fund still held the lead with $633.1 billion in assets compared to $631.8 billion for Vanguard's ETF. However, the gap between them has been steadily narrowing in recent months. Final data for the inflows into both ETFs will be available later on either Tuesday or Wednesday morning, as per sources such as FactSet.
In January, Citigroup Research analysts reported that the SPDR ETF experienced $19.4 billion in outflows, while Vanguard's ETF attracted $21.3 billion in inflows, making it the preferred choice for financial advisors and retail investors seeking lower costs.
While the SPDR ETF has historically been preferred by hedge funds and traders for its liquidity and narrow trading spreads, Vanguard's lower-fee ETF, launched in 2010, is gaining popularity for its cost-effectiveness.
Commenting on these trends, Ryan Jackson, senior analyst of passive strategies at Morningstar, noted that the SPY ETF has transitioned from an investment tool to a trading vehicle, leading to more volatile flows.
With continuous developments in the ETF industry, established giants like BlackRock, Vanguard, and State Street face competition from newer players, resulting in a more intense battle for market share.
Anna Paglia, executive vice president and chief business officer at State Street, pointed out that while SPY remains the most traded ETF globally, the industry is witnessing shifts towards newer retail-focused options like the SPDR Portfolio S&P 500 ETF, which appeals to retail investors with its low fees.
Despite State Street's ongoing significance in the ETF market, Todd Rosenbluth, head of research at VettaFi, suggested that Vanguard's ETF could potentially surpass its State Street counterpart, emphasizing that both products cater to different investor preferences.