VOO & Chill: Inflows Stay Strong as Risk-Off Sentiment Pressures the S&P 500

The Vanguard S&P 500 ETF (NYSE:VOO) continues to attract strong inflows as investors embrace the "VOO & Chill" phenomenon, despite the ongoing risk-off sentiment that has dragged down US equities.

The blue-chip fund, which became the first ETF to cross the $1 trillion asset mark, has continued to add assets despite the ongoing market jitters. ETF Db data shows that the fund has added more than $34.9 billion in assets over the past 30 days. These inflows have brought its year-to-date total to $137.6 billion, while its assets under management (AUM) have jumped to more than $1.057 trillion.

The surge has been driven by "VOO & Chill," a passive investing approach in which investors buy the fund and keep adding to their position regularly. They aim to hold for years, hoping the fund can repeat its historical performance over the long term.

VOO has continued to outperform other S&P 500 ETFs in terms of inflows. The popular SPDR S&P 500 ETF Trust (NYSE:SPY), which has a 0.09% expense ratio, has added $3.86 billion over the past 30 days and $13 billion year to date. The iShares Core S&P 500 ETF (NYSE:IVV) has added $7.8 billion over the past 30 days.

Fear and Greed Index Has Dropped to the Fear Zone

The VOO ETF is adding unprecedented assets this year, even as the S&P 500 Index continues to underperform. The index has jumped by 9.9% since January and is down by over 3.47% from its highest point this year. Most notably, the Fear and Greed Index has dropped to the fear zone of 39.

American investors are confronting a few risks. A major one is the fear that artificial intelligence is facing major headwinds. Some investors have warned about the AI bubble, which could burst as interest rates rise. 

These fears escalated this week after Nvidia (NASDAQ:NVDA) board pushed Jensen Huang to resign after two affairs, including one with an alleged Chinese spy. Huang was often seen as the "central banker" of the AI boom as he wrote checks to top AI companies like CoreWeave, Nebius, and Marvell Technologies. 

Further, there are fears that the Federal Reserve will continue tightening its monetary policy, especially after the recent jobs and inflation numbers. The data showed that the economy created 165k jobs, while the country’s inflation was higher than expected. US stocks tend to underperform the market whenever the Fed is tightening.

There are also concerns that earnings growth is slowing. With 91% of S&P 500 companies having reported, blended earnings growth stands at 31.9%, slightly above the expected 30%. In previous quarters, however, earnings beat expectations by more than 7 percentage points.

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