SSGA’s SPDR S&P 500 ETF (SPY) hits $200 billion AUM milestone

Aug 18th, 2016 | By | Category: Equities

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State Street Global Advisors SPDR S&P 500 ETF (NYSE Arca: SPY), the first exchange-traded fund to launch in the US in January 1993, has hit more than $200bn in assets, making it by far the largest ETF in the world.

SPDR’s US-listed S&P 500 ETF hits $200 billion record milestone

David Mazza, head of ETF and Mutual Fund Research at SSGA.

Inflows into US equity ETFs have outstripped all other ETF segments this year, with global investors piling in more than $43bn to July month-end, according to BlackRock data. As for SPY, inflows since 1 January have reached $5.4bn, helping to push fund assets to $201.6bn as of 16 August.

“Since its inception in 1993, SPY has offered all investors tax efficient, cost effective and liquid exposure to US large cap stocks,” said David Mazza, head of ETF and Mutual Fund Research at SSGA. “Crossing $200bn in assets under management on August 12, 2016 is testament to SPY’s prominence in the market and broad use by investors.”

The “broad use” of the ETF includes its deployment as core and satellite allocations in investors’ portfolios, its use in tactical and strategic positioning, as well as an alternative to futures and for cash equitization purposes.

The bellwether S&P 500 has returned over 8.2% year to date, as investors have sought the relative sanctuary of the US economy and alternatives to richly priced, low-yielding bonds. This positive performance has driven ETF net inflows as investors followed the momentum of the market, helping already large funds, such as SPY, to swell their assets even further.

This is alongside a general shift to ETFs over other fund structures. A report from PwC in July found that global ETF assets are likely to exceed $7tn by 2021.

SPY is not the only US-focused ETF to have grown to a monumental amount of assets. The iShares Core S&P 500 ETF (NYSE Arca: IVV) has almost $79bn and the Vanguard S&P 500 Index ETF (NYSE Arca: VOO) has more than $50bn. Both funds feature on the top 10 largest ETF list.

For investors searching for a more diversified US equity ETF, the Vanguard Total Market ETF (NYSE Arca: VTI) has reached $64bn, and is the third largest ETF in the world.

While performance above 8% for ETFs tracking the S&P 500 is certainly attractive, returns this year on gold have significantly outpaced those of US equities, propelling the assets of another behemoth ETF, the SDPR Gold ETF (NYSE Arca: GLD). GLD has risen to more than $41bn in assets and has returned more than 26% year to date in US dollar terms.

Among emerging markets, another sector to rebound in 2016 after a choppy New Year, the giant Vanguard FTSE Emerging Markets ETF (NYSE Arca: VWO) is up to $42bn in assets and has returned 18.3% year to date.

In general international developed markets, the iShares MSCI EAFE ETF (NYSE Arca: EFA) has gathered $61bn, although it has only risen around 2.5% since 1 January. It excludes the US and Canada, two of the best performing equity markets of the year.

There are some 100 ETFs listed in the US that contain more assets than the largest ETF listed in Europe. The largest FTSE 100 ETF listed in the UK is the iShares Core FTSE 100 UCITS ETF (LN: ISF), which has grown to £4.2bn since inception in April 2000.

Within fixed income, ETFs on both sides of the pond have some way to go before they catch up with the largest equity funds, which have been available to investors for a longer time.

The biggest fixed income ETF is the $40bn iShares Core US Aggregate Bond ETF (NYSE Arca: AGG), which costs just 0.08% per year and has performed a positive 5.4% YTD.

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