The Vanguard S&P 500 ETF (NYSE:VOO) is on the verge of becoming the first ETF in history to surpass $1 trillion in assets under management, marking a defining moment not only for Vanguard but for the broader ETF industry.
With approximately $994 billion in assets as of May 29, per Morningstar data, and daily inflows averaging more than $1 billion, the fund could cross the trillion-dollar threshold within days. The milestone reflects investors’ growing preference for low-cost, broad-market exposure at a time when passive investing continues to outpace active management.
The fund’s rapid growth has been fueled by strong performance in the S&P 500, particularly from mega-cap technology and artificial intelligence leaders such as Nvidia Corp (NASDAQ:NVDA), Apple, Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), Amazon.com, Inc (NASDAQ:AMZN), Alphabet, Inc (NASDAQ:GOOGL) and Broadcom, Inc (NASDAQ:AVGO). Information technology now accounts for roughly 35% of the portfolio, making VOO one of the biggest beneficiaries of the AI-driven market rally.
How VOO Overtook SPY
For decades, the SPDR S&P 500 ETF Trust (NYSE:SPY) was the undisputed king of ETFs. Launched in 1993, SPY pioneered the ETF industry and became a staple holding for both institutional and retail investors.
That changed in February 2025 when VOO surpassed SPY in assets and never looked back.
| Metric | VOO | SPY |
|---|---|---|
| Assets Under Management | ~$980.7 billion | ~$775.1 billion |
| Expense Ratio | 0.03% | 0.09% |
| Index Tracked | S&P 500 | S&P 500 |
| Primary Investor Appeal | Long-term buy-and-hold | Trading and liquidity |
The difference largely comes down to cost. While both funds provide nearly identical exposure to the S&P 500, VOO charges just 3 basis points annually compared with SPY’s 9 basis points.
That fee advantage has helped fuel more than $100 billion of inflows into VOO over the past year alone, widening its lead over its longtime rival.
Why the Trillion-Dollar Mark Matters
Industry observers say the milestone represents much more than a symbolic achievement.
“It confirms the dominance of ETFs as investors’ preferred investment vehicle over mutual funds,” said Seth Hickle, chief investment officer at Mindset Wealth Management, according to The Daily Upside. “This milestone also shows the growing institutionalization of passive investing as investors pour money into broad-based market exposure rather than trying to pick individual winners.”
The popularity of the “VOO and Chill” strategy—a phrase popularized by ETF analysts to describe buying and holding a low-cost S&P 500 fund—highlights how simplicity has become a powerful investing theme. Even as issuers launch increasingly specialized ETFs tied to artificial intelligence, cryptocurrency, and thematic trends, investors continue allocating capital to broad-market index funds.
What Investors Should Watch
The trillion-dollar milestone does not change the fund’s investment strategy. VOO remains a market-cap-weighted portfolio of approximately 500 large U.S. companies.
However, investors should recognize that the S&P 500 has become increasingly concentrated. The largest technology companies now account for a substantial share of the index, meaning VOO’s fortunes are closely tied to the performance of AI and mega-cap tech leaders.
For now, strong corporate earnings, continued AI spending, and persistent inflows into passive products appear to be supporting the trend. If VOO crosses $1 trillion, it will underscore a reality that has reshaped modern investing: low-cost passive ETFs have become the default building blocks of portfolios worldwide.
Photo: Shutterstock
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