Vanguard hits $1 trillion milestone with its S&P 500 ETF

The Vanguard S&P 500 ETF, known by the ticker VOO, has crossed the symbolic $1 trillion mark in assets, a first for an exchange-traded fund. The vehicle has quadrupled its assets under management since 2022 and has overtaken State Street's SPY, the long-standing market benchmark, driven by the Wall Street rally, steady inflows into index products, and the search for exposure to US large-cap stocks linked to artificial intelligence.

This milestone illustrates the scale reached by passive management in recent years, as global ETFs represented $21.9 trillion in assets at the end of April, vs. $6.4 trillion in early 2020, according to ETFGI. VOO's growth is also explained by its extremely low pricing, with fees of 0.03%, compared to 0.09% for SPY.

Beyond Vanguard's commercial success, this threshold highlights another market reality. Major US indices now concentrate a massive portion of global savings, which mechanically reinforces flows toward the largest American capitalizations. This dynamic could become even more visible with the expected initial public offerings of private giants such as SpaceX, Anthropic, or OpenAI, should these companies quickly join the benchmark indices.

However, this concentration of passive flows is not without consequences for the rest of the market. By automatically directing capital towards the same large caps, index ETFs can reduce the visibility and liquidity of smaller companies or those not included in the main indices. Some observers believe that this dynamic accentuates valuation gaps, reinforces the dominance of already established giants, and weakens the traditional role of active investors in capital allocation.