Vanguard's oldest ETF eclipses to US$1tn in value

Vanguard S&P 500 ETF has crossed the US$1 trillion mark in net asset value for the first time, becoming the first in the asset class to achieve the feat.

Morningstar associate director Daniel Sotiroff said the achievement underscores the immense success of index funds and Vanguard's role in their adoption by investors of all types.

Rivals iShares Core S&P 500 ETF and State Street SPDR S&P 500 ETF are close behind with a net asset value of around US$861 billion and US$786 billion respectively.

"Vanguard S&P 500 ETF didn't always look like the favourite to hit the trillion-dollar mark first," Sotiroff said.

"It was the smallest of the big three S&P 500 ETFs with about US$225 billion to its name just five years ago. State Street SPDR S&P 500 ETF was the giant at the time with around US$360 billion."

Sotiroff said inflows of new money largely went Vanguard's way and catapulted its ETF from third to first.

"Investors added more than US$400 billion of new money to Vanguard S&P 500 ETF between June 2021 and May 2026, while the iShares and State Street ETFs took in an estimated US$250 billion and US$88 billion, respectively," he added.

Vanguard's S&P 500 ETF was first launched in 1976 and is the first and oldest index-tracking mutual fund available to retail investors.

"Crossing the US$1 trillion barrier is more symbolic than anything. ETFs do not win prizes for growing to a particular size. Though Vanguard, and its funds that own the firm, will earn incrementally more revenue," Sotiroff said.

Vanguard's latest research also found younger Australians are more likely to incorporate ETFs into their portfolios, with nearly one in five Gen Z Australians report owning ETFs at around 19%, the highest rate of any age group.