Record inflows and new highs in stock markets have pushed SPY to become a $300 billion ETF.
The SPDR S&P 500 fund (SPY), from State Street Global Advisors, has reached the milestone 25 years after it first started trading. Its underlying index is the bellwether for the US economy, and has a high concentration in sectors like technology and financials.
SPY might achieve $500 billion AUM
Jim Ross, chairman of SSGA’s SPDR arm, told the Financial Times that he was looking forward to the ETF hitting $400 billion or even $500 billion in the future.
Despite launching in January 1993, asset growth has not been steady considering the tech bubble in the early 2000s and the financial crash in 2008. However, SPY has grown a whopping 42% since the day Donald Trump was elected, benefiting from the so-called Trump rally.
Good performance will continue to encourage investors, even though some analysts have expressed concern about overstretched valuations and even a stock market bubble. SPY is up more than 6% year to date and 27% over the last year in USD terms.
The FT also found that ETFs tracking the S&P 500 index account for $500 billion in assets alone, out of a global $4 trillion market and around 3 million stock market indexes to choose from. The second and third largest ETFs in the world are listed in the US by iShares and Vanguard and they also track the US stock market.
The news comes after data providers found that the US ETF market has grown by 34% last year to $3.42 trillion.
Millennials are buying ETFs
With new users of ETFs coming to market, asset growth is likely to continue. iShares found in a survey that 42% of millennials are now invested in ETFs – up from 33% last year. Out of the survey of 1,000 people, 85% of the respondents said they were planning to buy ETFs in the coming year.