The 3 most popular ETFs by assets under management

SPDR S&P 500 ETF Trust (SPY)

SPY currently leads the ETF industry with an incredible $378 billion in AUM. The ETF is so popular that many investors and traders use it as a reference for the S&P 500 altogether. Anecdotally, I've heard more people quote SPY than the actual ticker for the S&P 500 Index (SPX). 

SPY's success can be attributed to SSGA's first-mover advantage. Back in 1993, SSGA launched the Standard & Poors Depositary Receipts, which was the first ETF in the U.S. This launch was highly disruptive to the existing mutual fund industry and kick-started the ETF industry. 

Today, SPY remains incredibly liquid and popular. As of December 13th, the ETF saw over 73 million shares traded over the last 30 days, with a minuscule bid-ask spread of 0.002%. SPY also has a very well-developed options chain, with many strike prices and expiry dates available. 

iShares Core S&P 500 ETF (IVV)

SPY might be a popular ETF for traders, but it's slightly less popular among the buy-and-hold crowd for one reason: its expense ratio. While 0.0945% isn't considered high, its not the cheapest in the industry. For passive investors, picking between identical ETFs often boils down to which one has the lowest fees. 

For those desiring a low-cost equivalent to SPY, BlackRock iShares has IVV, which was launched on May 15th, 2000. This ETF still has very high AUM of $305 billion, 30-day average volume of 3.86 million shares, and a tiny bid-ask spread of 0.006%. 

The biggest benefit of picking IVV over SPY is its lower expense ratio of 0.03%, which comes in at just under a third of what SPY charges. If your account size is large enough and your holding period is long, the lower fees could end up making a tangible difference.

Vanguard S&P 500 ETF (VOO)

Index ETFs from Vanguard remain a perennially popular choice among passive investors, also known as "Bogleheads." The firm has a history of slashing expense ratios and keeping fund turnover low, which has helped them attract a loyal and devoted investor base. 

VOO is currently Vanguard's most popular ETF, with $273 billion in AUM at the moment. Its popularity stems from its mutual fund predecessors, the now-closed Vanguard 500 Index Fund (VFINX), which itself grew from the First Index Investment Trust, considered to be the first commercially viable index fund. 

Today, VOO remains a low-cost, transparent, and no-frills choice for investors looking to index the S&P 500. The ETF is often used as a tax-loss harvesting pair against its broad-market counterpart, the Vanguard Total Stock Market ETF (VTI) owing to their similar performance yet different composition. 

Please note this article is for information purposes only and does not constitute investment advice.