Most investors are aware that just a few companies dominate the stock market. But the same goes for ETFs too.
Just 10 ETFs, including giants like Vanguard S&P 500 (VOO), SPDR S&P 500 (SPY) and iShares Core S&P 500 (IVV), hold nearly $4 trillion in investors’ assets, says Morningstar Direct. That accounts for roughly a third of the total $12.6 trillion housed in major ETFs.
These mega-ETFs’ size allows them to lure in more investors looking for low-cost funds capable of supporting huge trading volumes. And their momentum builds from there. “These large funds are typically low-cost and highly liquid, which makes them appealing as more investors embrace ETFs,” said Todd Rosenbluth, head of research at Vetta Fi.
The ETF Boom Continues
The appeal of ETFs keeps soaring — pulling more money into these popular funds.
Rosenbluth says the ETF industry already accumulated $800 billion in new assets this year. He says that puts ETFs on pace for the second consecutive year of $1 trillion in net inflows.
So while the giant funds are growing, so are smaller ETFs. “While the largest funds collectively hold a significant portion of the asset base, the overall market is also expanding,” Rosenbluth said.
Is There ETF Concentration Risk?
Rosenbluth doesn’t think the fact that a few ETFs are so dominant poses a risk.
For one thing, the fund giants are based on stock-market indexes that reflect the broader market. The top three funds hold stocks from the S&P 500. But he points out that they only own a small percentage of shares in companies like Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOGL).
“Most of these stocks are owned by mutual funds or individual investors directly,” he said. “Additionally, other large ETFs provide diverse, non-overlapping exposure beyond the S&P 500, including international stocks and bonds.”
Change At The Top?
Plus, there’s no guarantee the top ETFs will stay there.
Vanguard S&P 500 ETF now holds $794.1 billion in assets. That makes it the largest ETF, pushing down long-standing asset champ SPDR S&P 500 ETF to No. 2 with assets of $672.2 billion.
Rosenbluth also wonders how long Vanguard Value (VTV), with assets of $147 billion, can stay in the top 10 “despite a more favorable environment for growth investing in 2025.” The value fund, though, continues to amass assets, he says.
Additionally, it wouldn’t surprise him to see a small-cap ETF break into the top 10. Such funds haven’t been investors’ favorites. They “could see increased demand as the (Federal Reserve) cuts rates,” he said. The iShares Core S&P Small-Cap ETF (IJR), a low-cost broad market small-cap fund, could see a lift in its assets from $85 billion if small caps pick up.
Crypto is also a potential winner. IShares Bitcoin Trust (IBIT) is less than two years old. But with assets of nearly $89 billion, it’s already among the top 20 ETFs. “If investors consistently allocate a small portion of their portfolios to crypto, IBIT is likely to continue seeing demand,” Rosenbluth said.
But for now, the ETF giants allow investors to build diversified portfolios fast and inexpensively. The top 10 ETFs cover everything from U.S. stocks to international and bonds. “Keeping it simple offers significant benefits to investors,” he said.
Meet The ETF Giants
Just 10 funds hold roughly a third of all ETF assets