Vanguard's VOO Becomes First ETF to Cross $700B

This year has been a landmark year for Vanguard S&P 500 ETF VOO. After dethroning the SPDR S&P 500 ETF Trust SPY earlier in 2025 as the world’s largest ETF, VOO has now set another record, becoming the first ETF in history to top $700 billion in AUM.

VOO’s AUM currently stands at roughly $709 billion, outpacing SPY’s $647.7 billion and iShares Core S&P 500 ETF IVV at $645 billion, according to ETF.com. The lead has widened steadily in 2025, fueled by heavy inflows (read: U.S. Equity ETF Demand Surged Last Week Despite Market Selloff).

So far this year, VOO has attracted $74 billion in net new money, more than triple the inflows of its nearest competitor, iShares 0-3 Month Treasury Bond ETF SGOV, which added $23.8 billion. If the current pace holds, VOO is set for another $100 billion-plus inflow year, following a record $117 billion in 2024.

The fund has been powered by strong stock market gains, Vanguard’s investor-friendly reputation, its ultra-low expense ratio, better tax structure and the dividend reinvestment option.

Stock Market Remains Bullish

The S&P 500 has been on a solid surge driven by optimism over AI trade, a solid earnings season and expectations that the Federal Reserve will cut rates in September.

Demand for data centers, GPUs, AI-focused software and automation tools is driving investor enthusiasm across the board. Meanwhile, the overall earnings picture remains strong and resilient. The outlook for the current and coming quarters has started improving, with a favorable revision trend particularly notable for the Tech sector. Total Q2 earnings of S&P 500 companies are up 11.6% year over year on 5.9% revenue growth, with 80.4% beating EPS estimates and 79.1% beating revenue estimates. With this, aggregate Q2 earnings are on track for a new all-time quarterly record.

The latest economic data have raised the odds for the Federal Reserve to lower interest rates when it next meets in September. Lower interest rates will benefit the stocks, which are more sensitive to borrowing costs. It will also ramp up consumer spending, which bodes well for economic growth.

Further, President Trump announced a 100% tariff on semiconductor imports, but exempted companies that manufacture in the United States or are committed to U.S.-based production, benefiting major players like Apple AAPL, Taiwan Semiconductor Manufacturing TSM, Samsung and SK Hynix. This relief sparked a rally in chip and tech stocks (read: ETFs Set to Benefit from Apple's $100B U.S. Bet).

The gains came despite the tariff chaos. Trump began imposing higher import taxes on nearly 200 countries, ranging from 10% to 50%, last week.

NVIDIA & Microsoft Surge

VOO has benefited from the exceptional performance of the tech giants, particularly NVIDIA (NVDA) and Microsoft (MSFT), which account for about 7% each in the basket. NVIDIA shares have gained nearly 90% from their early-April low and 22% since the start of the year, as major tech companies continue to ramp up spending on AI infrastructure that depends on the company's chips. In fact, NVDA became the first publicly traded company valued at $4 trillion last month.

Microsoft joined NVIDIA in the $4 trillion club following its blowout fourth-quarter fiscal 2025 results, fueled by growth in its cloud and AI businesses. Shares of MSFT have climbed more than 110% since the debut of OpenAI’s ChatGPT in November 2022 (read: ETFs to Buy as Microsoft Nears $4T Mark Post Blowout Q4 Earnings).

VOO’s Structure & Tax Efficiency

Rock-bottom fees have been instrumental in attracting cost-conscious retail investors and advisors to VOO. 

VOO does not have any restrictions and can lend out shares to earn extra. It also reinvests dividends in the index until paid out quarterly, thereby increasing returns from the fund. VOO is more tax-efficient than its counterparts, thanks to the open-end structure and in-kind creation/redemption mechanisms. 

VOO has a Zacks ETF Rank #1 (Strong Buy).
 

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This article originally published on Zacks Investment Research (zacks.com).

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