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S&P 500 biggest ETF set to surpass $500 billion in assets for first time-ever

S&P 500 biggest ETF set to surpass $500 billion in assets for first time-ever

It has undeniably been a stellar year for the US stock market, fueled by an explosive surge in the artificial intelligence (AI) sector. 

Tech stocks, in particular, have experienced a remarkable boom, propelling the broader S&P 500 index to a year-to-date surge of over 25%, inching tantalizingly close to its all-time high of 4,796.56 reached on January 3, 2022.

The double and triple-digit returns in major tech giants have also propelled SPY, the largest S&P 500 exchange-traded fund (ETF), to the cusp of a historic milestone—surpassing $500 billion in assets under management (AUM) for the first time in history, StockMKTNewz highlighted on December 29. 

SPY on track to hit $500 billion in AUM. Source: StockMKTNewz X account

What is driving SPY’s growth?

SPDR S&P 500 ETF Trust, or just SPY, is an exchange-traded fund ( that mirrors the performance of the S&P 500 index, encompassing 500 of the largest publicly traded companies in the US. 

Its popularity among stock investors is attributed to its simplicity, providing a straightforward way to gain exposure to a diversified basket of leading US stocks. 

According to market data, the fund started the year with roughly $355 billion in AUM. In the following 12 months, SPY embarked on a rapid growth trajectory, driven by a mix of factors, most notably the strong performance of a broader market and unparalleled inflows from investors. 

The bulk of those gains came from Big Tech stocks, which are thriving on the ongoing frenzy around generative AI services. The prime example of this trend is Nvidia (NASDAQ: NVDA), with the chipmaker seeing a 245% surge year-to-date.

Meanwhile, the capital influx into SPY could make 2023 its strongest year for inflows since the fund’s launch in 1993. Remarkably, $37.5 billion of inflows have come in December alone, making it SPY’s strongest month on record.

As a result, the SPY could wrap up 2023 with a significant milestone, surpassing half a trillion in AUM. 

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