Low fees draw US$69 billion into a single fund this year as passive cash eyes coming mega-IPOs
A fee of three cents on every US$100 helped the Vanguard S&P 500 ETF cross US$1tn in assets.
No exchange-traded fund had reached that level before, the firm confirmed on Wednesday, according to Reuters.
The fund, known by its ticker VOO, crossed the line on Tuesday after a US$1.7bn daily inflow and now ranks as the largest ETF in the world, Bloomberg reported.
VOO has drawn more than US$69bn so far in 2026, the most of any ETF, as the S&P 500 has climbed 11 percent year to date.
The Financial Times reported the fund overtook State Street's SPDR S&P 500 ETF (SPY) in February 2025 and has pulled further ahead since.
SPY now holds US$785bn and charges 0.0945 percent, as per Reuters, while BlackRock's iShares Core S&P 500 ETF (IVV) holds US$860bn at a matching 0.03 percent fee, according to VettaFi.
Those flows show how closely investors now watch cost, even at minimal fee levels, Deborah Fuhr, managing partner of ETGI, told the FT.
She said small differences in expense ratios add up over time and shape where big investors put their money.
Todd Rosenbluth, head of research at VettaFi, made a similar point to the FT, calling Vanguard's VOO "the massive winner here" because it is the biggest and among the cheapest ways to ride the trend.
VOO's rise reflects a decade-long shift into passive investing, driven by low fees and the underperformance of many actively managed funds.
Globally, ETFs held US$21.9tn at the end of April, more than three times their level at the start of 2020, according to consultancy ETFGI.
According to Bloomberg, Vanguard is now close to passing BlackRock as the world's largest ETF issuer.
The milestone also points to the passive money set to flow into a wave of large listings this year, including SpaceX, Anthropic and OpenAI, the FT reported.
New "fast entry" rules could speed new stocks into the S&P 500, forcing trackers such as VOO to buy in.
That dynamic can distort pricing, said Rob Arnott, founder and chair of Research Affiliates.
He told the FT that passive funds get pushed into a post-IPO price "that may be inflated in anticipation of the inclusion."
Arnott still plans to buy the SpaceX IPO.
Among current rivals, only IVV has the potential to overtake VOO, largely because of BlackRock's larger model portfolio business, Todd Sohn, chief ETF strategist at Strategas Asset Management, told the FT.
