Investors Pull $33 Billion From SPY in 2020

The largest and oldest ETF faces outflows, even as money has poured into ETPs.

$33 billion — that's how much has been pulled out of the world's biggest exchange traded fund, the SPDR S&P 500 ETF Trust (SPY), by traders and investors so far this year, according to Bloomberg. Launched in 1993, SPY tracks the S&P 500 index and was the first ETF listed in the U.S. Its current assets under management (AUM) is $294 billion.

Why Does It Matter?  

The outflows are noteworthy since the broader equity ETF universe has drawn $119 billion in 2020. High expense fees may be to blame, according to Bloomberg, but it may also be a case of not being specialized enough.

Big ETFs like the Invesco's QQQ, which tracks the Nasdaq 100, and upstarts like Ark Invest's ARKK, which holds the stay-at-home stock stars like Zoom (ZM) and DocuSign (DOCU), have been putting up gaudy performance numbers throughout the pandemic. 

stock price chart

The Biggest and the Busiest

Not only is SPY the biggest ETF by AUM, it's also the most widely traded. Big institutional investors and hedge funds use SPY as a hedging tool to balance their other positions throughout the course of a trading day, according to Jim Ross, who helped create the SPY for State Street in the early 1990s.

It's also the most widely held ETF by individual investors in their retirement and brokerage accounts. If assets keep flowing out of the ETF, it may lose its grip as a key rudder in the capital markets.

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Image courtesy ETF Database Inc.
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  1. Bloomberg. "World’s Biggest ETF Is Losing Cash Faster Than Any of Its Peers."

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