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Simultaneous Mega ETF Trades Hint at S&P 500 Index Funds Switch

Simultaneous Mega ETF Trades Hint at S&P 500 Index Funds Switch

(Bloomberg) -- Investors seeking exposure to the S&P 500 may be dumping one long-favored exchange-traded fund for its cheaper sibling.

State Street Corp.’s SPDR Portfolio S&P 500 ETF, ticker SPLG, gained $662 million on Thursday, its biggest one-day inflow on record, according to data compiled by Bloomberg.

Simultaneous Mega ETF Trades Hint at S&P 500 Index Funds Switch

The money could be coming at the expense of the legendary SPDR S&P 500 ETF Trust, or SPY, which has a higher expense ratio at 0.095% than SPLG at 0.03%. Last month, State Street changed SPLG’s underlying benchmark to the S&P 500 Index instead of its previous SSGA Large Cap Index. That means investors can get a similar exposure as SPY but at a lower cost.

About $657 million worth of SPLG shares hit the tape at 3:49 p.m. in New York Thursday. At the same time, $422 million worth of SPY shares were traded.

The flows represent a bigger quandary that issuers in the $4.7 trillion industry are grappling with as a fee war continues: the risk that decreasing the cost of one fund could take away flows from a pricer product. For example, BlackRock Inc.’s iShares Broad USD High Yield Corporate Bond ETF pulled in $1.4 billion this year while its similar, yet pricer, fund the iShares iBoxx High Yield Corporate Bond ETF lost $830 million.

“While SPY still has an edge for higher trading volume and tighter bid/ask spreads, for buy-and-long-term-hold investors SPLG makes a lot of sense,” said Todd Rosenbluth, CFRA Research’s New York-based director of ETF research.

Following are the fund’s biggest holdings as of Feb. 13:

NameTickerPositionValue (USD)Change in Position% of Total Asset Value
Microsoft Corp.MSFT US Equity1.1 million202.2 million4,3285
Apple Inc.AAPL US Equity602,713195.8 million2,3684.8
Amazon.com Inc.AMZN US Equity59,988129 million2403.2
Facebook Inc.FB US Equity347,06074 million1,3681.8
Alphabet Inc.GOOGL US Equity43,22165.4 million1681.6
Alphabet Inc.GOOG US Equity43,06065.2 million1681.6
Berkshire Hathaway Inc.BRK/B US Equity282,22263.9 million1,1121.6
JPMorgan Chase & Co.JPM US Equity452,41762.4 million1,7761.5
Johnson & JohnsonJNJ US Equity379,51657 million1,4881.4
Visa Inc.V US Equity246,88751.2 million9681.3

To contact the reporter on this story: Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Randall Jensen

©2020 Bloomberg L.P.