In the ever-changing landscape of global financial markets, a significant transformation has quietly emerged over the years, redefining the structure of the worldwide exchange-traded funds (ETFs) marketVanguard's S&P 500 ETF, known as VOO, has surged to prominence, amassing over $630 billion in total assets, and has claimed its position as the new heavyweight champion of the global ETF domainThis milestone not only marks the ascension of VOO but also signals a profound shift and reconstruction within the ETF marketplace.

According to meticulously compiled data from local agencies in the U.S., VOO has successfully eclipsed the "evergreen" giant in the ETF arena—the SPDR S&P 500 ETF Trust managed by State StreetLaunched in 1993 through a partnership between the American Stock Exchange (now NYSE) and State Street, SPY is among the oldest ETFs still in existenceThroughout its lengthy journey, SPY has grown alongside multiple generations of Wall Street traders, gaining a significant first-mover advantage in terms of size, trading volume, and brand recognition, ultimately becoming an iconic product in the ETF market.

However, unlike SPY, which was designed primarily for trading, VOO was introduced in 2010 with a strategic focus on one of the most crucial selling points—low fees

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In a market increasingly leaning toward low-cost, efficient investment options, this strategy has successfully fostered a loyal following among retail investors and financial advisors alikeIn 2024, various investors funneled a remarkable $116 billion into VOO, setting a new record for the global ETF industry.

The difference in fees serves as a pivotal factor in the competition between VOO and SPYCurrently, SPY charges an annual management fee of 0.095%, helping investors access tools that track the S&P 500 index; whereas VOO offers the same access for just 0.03%. As more investors increasingly consider low-cost index ETFs as their preferred investment tools, VOO's size continues to swell with sustained capital inflowsReflecting on historical data, at the start of 2022, VOO's management size lagged behind SPY by $182 billion, and even as recently as last November, there remained a $50 billion gapYet since 2025 began, even with relatively modest gains in the U.S. stock market, VOO has attracted about $23 billion in funds, while SPY faced $16 billion in net outflowsThis drastic dichotomy in capital flows accelerated the anticipated "changing of the guard" within the ETF marketplace.

Despite VOO's ascendance in size, SPY retains a formidable advantage in the realm of professional tradingUnlike VOO investors who adopt a "buy and hold" long-term investment strategy, SPY continues to be the first choice for professional traders due to its exceptional liquidity and narrow spreadsOver the past year, SPY boasted an average daily trading volume nearing $29 billion, whereas VOO's average was only $2.8 billionThis significant trading volume propels large-scale bidirectional trades within SPY, showcasing its leading status in trading activity

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Since VOO’s inception in 2010, it has never witnessed an annual net outflow of funds, while SPY has encountered net withdrawals from investors in five separate years, indirectly highlighting differences in investor bases and behavioral patterns between the two ETFs.

Before VOO claimed the crown, SPY's position as the "ETF monarch" faced a brief but notable challengeIn 2011, as international gold prices skyrocketed, BlackRock’s gold ETF swiftly ballooned to $78 billion in assets, briefly surpassing SPYHowever, over the past decade, U.S. stock index funds, benefiting from strong performances in the American stock market and investors' growing penchant for index investing, have solidified their dominance in the ETF industryToday, while BlackRock’s gold ETF has returned to a scale of $80 billion, it ranks approximately 20th in the global ETF hierarchy.

It is crucial to observe that SPY may still face a potential decline in its rankingBlackRock's iShares Core S&P 500 ETF is currently nearing $610 billion in assetsWith a management fee identical to VOO’s 0.03%, IVV now competes directly with VOO on cost and could become an even more severe challenger to SPY's ranking in the futureNevertheless, SPY's downside seems relatively constrainedBesides VOO, IVV, and SPY, which are the only three ETFs exceeding $600 billion in scale, the next potential contender, Vanguard's Total Stock Market ETF, has yet to reach $500 billionMeanwhile, a well-known ETF in China, the Invesco QQQ Trust, which tracks the Nasdaq 100 index, hovers just above $330 billion, positioning itself as the fifth-largest globallyThe rise of VOO to the top of the global ETF market is just a glimpse of an industry undergoing significant metamorphosis

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As investor preferences continue to evolve, cost competition intensifies, and the market environment adapts, the landscape of the global ETF market is bound to change dynamically, with competition among leading ETFs like SPY, VOO, and IVV becoming increasingly fierceThe path forward is rife with uncertainty and vast opportunities.