With the first half of 2025 in the books, it’s been a Very interesting six months — emphasis on “V” because the S&P 500 saw a nice V-shaped formation following the April sell-off. As markets always reveal, interesting times call for interesting ETF trends to follow. TMX VettaFi’s Head of Research Todd Rosenbluth saw some notable trends outlined in his latest visit with ETF Prime. The biggest one is VOO retaining its position as largest ETF.
Still the Heavyweight Champion
When you wanted baseline equities exposure to the biggest movers and shakers, the SPDR S&P 500 ETF Trust (SPY) was typically the default maneuver and thus, the largest ETF (based on assets under management). However, it saw its reign come to an end in February as Vanguard S&P 500 ETF (VOO) — there’s the “V” again — supplanted SPY as the biggest ETF. It doesn’t appear to be a temporary title reign, as momentum in VOO could keep its position firmly planted atop the largest ETFs list. As ETF Prime host Nate Geraci mentioned, VOO has already garnered $83 billion in inflows. And the ETF juggernaut is not stopping.
“VOO is going to set the record for individual ETFs,” Rosenbluth said. He noted that it’s imperative as the core of a portfolio.
When juxtaposing their performance charts side by side, you’ll see an ever-so-slight advantage for VOO. When looking at their holdings, VOO and SPY are both practically the same. It’s vis-a-vis the Spider-Man meme of identical twins pointing at each other.
VOO data by YCharts
Could it be investors simply want to try a new flavor after tasting the broad market exposure of SPY for several years? As Morningstar identified, a big differentiator is price.
SPY has a 0.09% expense ratio and VOO comes in at 0.03%. That’s a 6-cents-on-the-dollar savings or $600 on a hypothetical $10,000 investment in VOO. When you multiply that with copious amounts of capital that institutional investors can throw around with their treasure chests of cash, it’s a lot of savings. For retail investors, that 6 basis point difference is enough for the cost-conscious to choose one over the other. That’s especially the case in a macroeconomic environment still fraught with high inflation and rates.
Another differentiator is structure. SPY was set up as a unit investment trust. Most ETFs are created as open-end funds. This limits the ability of SPY managers to reinvest dividends, use derivatives for equitizing cash, or to lend securities. This can help add to an ETF’s income — all of which VOO can do at one-third of SPY’s expense ratio.
Active Still Active & Boring Is Attractive
Investors still can’t get enough of active ETFs. With their expense ratios continuing to come down closer to their passive peers, they continue to garner inflows: 40% of inflows thus far while also making up 90% of launches halfway through 2025, Rosenbluth noted. They still have a ways to go when it comes to total market share. But it can only go up from here.
“That [low-cost exposure] is still a priority for many investors. But I think we’re going to continue to see the market share of roughly 10% for active ETFs right now continue to climb,” Rosenbluth said.
In other trends, fixed income ETFs set more records for inflows. With April’s sell-off, investors were reminded of how assets like bonds can serve as a ballast for a portfolio. When compared to stocks, bonds might not be as active. But to fixed income investors, they certainly are attractive. Whether it’s to extract maximum yield at today’s elevated interest rate environment or to prep for another market shock like April, having a fixed income strategy is paramount today.
As TMX VettaFi Staff Writer Elle Caruso Fitzgerald identified in her snapshot of Rosenbluth’s discussion with ETF Prime, other trends emerged such as smart beta and 351 exchanges. In addition, the popularity of crypto ETFs was mentioned, proving that they’re not an ETF fad that will fall quickly to the wayside. Rosenbluth also mentioned the retirement of ETF trailblazer Bob Pisani as a notable first-half occurrence and more.
Listen to the whole episode here.
For more trends in the ETF industry, visit ETF Trends.
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