Big Outflows from This Popular Fund Might Be Sending an Important Message

SPDR S&P 500 ETF sees biggest outflow of any ETF this week; cheaper S&P 500 funds see inflows

by Ryan Vlastelica
Market Watch

The SPDR S&P 500 exchange-traded fund SPY, +0.05% one of the most popular ways for investors to play the U.S. equity market, saw more than $1 billion in outflows this week, the most of any ETF, according to FactSet data.

While investors pulled money amid a rocky patch for the S&P 500 SPX, +0.02% —the benchmark the fund tracks, and which is heading for its second straight weekly decline—the outflow could also point to the importance of low fees for index funds, even in an environment where major rivals only differ by a manner of basis points (each basis point equals 0.01%).

Major ETF providers announced that they were cutting fees last week, including BlackRock Inc. BLK, +1.59% a major rival to State Street Global Advisors STT, +0.36% which runs the SPDR fund. Compared with other ETFs that track the S&P 500, including the Vanguard S&P 500 ETF VOO, +0.03% and BlackRock’s iShares S&P 500 ETF IVV, +0.01% the SPDR fund is the most expensive, with an expense ratio of 0.09%. The iShares fund has an expense ratio of 0.04%, while the Vanguard fund clocks in at 0.05%.

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