State Street's decision to slash fees on its SPDR Portfolio S&P 500 ETF has paid off handsomely. The fund, now trading as SPYM, saw its assets balloon to $115 billion after a 2023 fee reduction to just 0.02% from 0.03%. This tiny cut undercut BlackRock and Vanguard's rival funds by a single basis point, triggering massive investor inflows.

Since the fee cut, SPYM has absorbed $24.3 billion in 2026 alone, more than any other ETF according to Bloomberg data. The strategy demonstrates that even in today's crowded ETF market, costs still matter to investors and advisers. While SPYM remains dwarfed by Vanguard's VOO and BlackRock's IVV, it's punching well above its weight in attracting new capital.

At 0.02% annually, SPYM generates roughly $23 million in fee revenue compared to just $6 million when it managed $20 billion at the higher rate. This illustrates the brutal economics of index-tracking funds: ultra-low fees require massive scale to be profitable. State Street's success with SPYM comes as the broader industry shifts toward active and leveraged products, with 36% of new funds last year being either leveraged or cryptocurrency-based.