Vanguard's VOO ETF hits $1T assets, beating SPY with lower fees and better dividend reinvestment.

The Vanguard S&P 500 ETF (VOO) has reached $1.03 trillion in assets, becoming the first ETF to cross the trillion-dollar mark while charging just 0.03% in fees, significantly lower than the SPDR S&P 500 ETF Trust (SPY) which charges 0.0945%. SPY, the most traded ETF with deep options liquidity, is limited by its legacy structure that prevents dividend reinvestment, causing a cash drag and higher costs over time. VOO, an open-end fund, reinvests dividends immediately, offering a slight but compounding performance advantage for long-term investors. State Street has also launched SPDR Portfolio S&P 500 ETF (SPYM) with even lower fees but smaller asset size and less liquidity. For long-term holders in tax-advantaged accounts, switching from SPY to VOO or SPYM can save on fees without significant downsides, though options traders may prefer SPY for liquidity.