SPY roars past $300bn, days before 25th anniversary

Jan 25th, 2018 | By | Category: Equities

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Assets invested in the SPDR S&P 500 ETF (SPY US), the world’s largest exchange-traded fund, have roared past $300 billion just days before the twenty-fifth anniversary of its launch on the American Stock Exchange, now part of NYSE.

Jim Ross, chairman of global SPDR business

Jim Ross, chairman of the global SPDR business at State Street Global Advisors.

Jim Ross, chairman of the global SPDR business at State Street Global Advisor, the asset manager behind the ETF, said, “As the first US ETF, the SPDR S&P 500 ETF or “SPY” forever changed the way we access the global markets, transformed the asset management industry and created what is now a $4 trillion-plus global marketplace for ETFs.

“For SPY to reach $300bn in assets just days before the twenty-fifth anniversary of its first day of trading is very special and a testament to the fund’s unmatched resiliency and versatility along with the increased acceptance of passive investing.”

The assets-under-management milestone has been reached through a combination of strong inflows and impressive market performance, with the fund gathering over $12bn in net inflows already this month, on top of a 6% rise in the S&P 500. This on the back of inflows of $6bn in 2017 and market return of 21.8%.

The fund, which is a go-to favourite for a host of portfolio functions owing to its transparency, low cost and liquidity, has been the beneficiary of a secular structural shift in the asset management industry which has seen funds shift from active management to passive management, and especially towards lower cost exposures such as ETFs.

SPY has an expense ratio of 0.09%, compared to actively managed funds which frequently charge around 1%.

SPY is by far the largest ETF but several competitors tracking the same index are hot on its heels, pulling in assets at a faster rate. The chasing pack is lead by ETFs from arch-rivals BlackRock and Vanguard, both with ETFs charging just 0.04% per annum. These ETFs, namely the iShares Core S&P 500 ETF (IVV US) and the Vanguard S&P 500 ETF (VOO US), have managed to accumulate assets of $150bn and $90bn respectively, including net inflows of $30bn and $15bn in 2017

In Europe, SSGA offers a sibling to SPY, the SPDR S&P 500 UCITS ETF (SPY5 LN), which also costs 0.09%, but it is significantly smaller with just $2.8bn in assets. The largest S&P 500 ETF in Europe is the iShares Core S&P 500 UCITS ETF (CSPX LN), with $27.2bn AUM and fees of 0.07%.

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