Nvidia's Surge Results in Index Funds and ETFs hitting $500B Valuation

Market participants said that a staggering rise in Nvidia shares helped the SPDR S&P 500 ETF Trust become the first exchange traded fund to reach $500 billion in assets. The largest and most liquid fund tracking the Standard & Poor's 500 index reached $500 billion on Thursday, according to its issuer, State Street Global Advisors. It currently has approximately $502 billion in assets.

A sizable portion of those gains came from the surge in Nvidia, whose high weighting in the S&P 500 gives it an outsized influence on the index's movements. The stock's shares have risen nearly 60% year to date, with an additional 8.9% in the last week alone, thanks to a post-earnings surge on Thursday.

“This is a result of Nvidia climbing to new highs rather than of fresh demand for the ETF,” said Todd Rosenbluth, chief ETF strategist at VettaFi.

Nvidia, one of the so-called Magnificent Seven stocks that have helped drive markets higher this year, has a weighting of 4.5 per cent in the S&P 500. The index is up 6.7 per cent year-to-date.

On Friday, the company briefly reached $2 trillion in market value for the first time, fueled by insatiable demand for its chips, which propelled the Silicon Valley firm to the forefront of the generative artificial intelligence boom. While the SPDR ETF continues to dominate trading volumes and liquidity, and topped the list of ETFs with the highest inflows last year, two other broad market ETFs have emerged as competitors in recent years.

Flows into BlackRock Inc.'s iShares Core S&P 500 ETF and the Vanguard S&P 500 ETF have grown faster over the last three years, according to LSEG data. The three ETFs now account for approximately $1.35 trillion of the $8.4 trillion invested in ETFs in the United States. Rosenbluth noticed.