Ken Griffin's Citadel Boosts Investment in Vanguard S&P 500 ETF by 277%

Ken Griffin's Citadel Advisors has just made headlines by significantly increasing its stake in a highly regarded S&P 500-themed ETF.

Each quarter, institutional money managers with over $100 million invested must file a form 13F with the Securities and Exchange Commission (SEC). These filings provide an in-depth look at the stocks that hedge funds are buying and selling, offering insight into which companies are favored by major Wall Street players.

Ken Griffin, the billionaire CEO of Citadel Advisors, is often recognized as one of the top money managers in the industry. It's commonly believed that Griffin and his team have valuable insights that guide them in selecting the most promising stocks at opportune moments.

Interestingly, sometimes the best investment opportunities are the ones that seem most obvious. In the third quarter, Citadel increased its position in the Vanguard S&P 500 ETF (VOO 0.02%) by a remarkable 277%, adding 398,000 shares. This decision shows that one of the most esteemed investors is backing the S&P 500.

Let’s delve into the reasons this move by Griffin is sensible, and why the Vanguard S&P 500 ETF is a smart choice for individual investors with a long-term perspective.

Why is the Vanguard S&P 500 ETF a Strong Investment?

First, it's essential to know that Citadel Advisors manages over $95 billion in assets, which are spread across more than 5,700 positions. While it's noteworthy that the firm is invested in the Vanguard S&P 500 ETF, it’s not unexpected. Given the size of Citadel's portfolio, this ETF only represents about 0.30% of the entire fund.

However, the broader implication here is that Citadel is balancing its individual stock investments with exposure to the overall market. This strategy helps mitigate risks associated with more volatile stock positions.

A reason why Griffin may favor the Vanguard S&P 500 ETF is its investment strategy. The fund is weighted by market capitalization. In layman’s terms, larger companies like Apple, Microsoft, Nvidia, and Eli Lilly have a greater impact on the fund's performance compared to smaller stocks. These major players are typically growth-oriented. Additionally, the ETF offers extensive diversification across various sectors.

Long-term Performance of the Vanguard S&P 500 ETF

Looking at the long-term performance, the Vanguard S&P 500 ETF has consistently shown strong returns compared to other S&P 500-themed index funds.

While the Vanguard S&P 500 ETF leads this group, it narrowly surpasses the SPDR S&P 500 ETF Trust over the past decade. This is somewhat expected, as the SPDR S&P 500 ETF also aims to match the S&P 500's returns using a market-cap weighted approach.

The Vanguard ETF edges out its SPDR counterpart mainly due to its lower cost. With an expense ratio of only 0.03%, compared to the 0.0945% of the SPDR fund, the Vanguard S&P 500 ETF is considered very cost-effective.

Why Consider the Vanguard S&P 500 ETF?

In my view, the management fees that investors pay is just one piece of the puzzle. The more significant consideration is the market outlook. Current trends indicate that 2025 could be another strong year for the market. However, it’s essential not to focus too much on specifics. The stock market has historically proven to be resilient and tends to rise over the long term.

Moreover, the Vanguard S&P 500 ETF has provided impressive returns over the past ten years. This performance includes times when the S&P 500 faced significant declines, such as during the brief COVID-19 recession in 2020, and the extended drops of 2022, characterized by heightened inflation and aggressive interest rate hikes from the Federal Reserve.

Despite these challenges, the S&P 500, along with similar funds, continued to rise. As a result, the Vanguard S&P 500 ETF presents a solid option for investors who are in it for the long haul. It’s an excellent choice for those looking for passive exposure to the broader market alongside their individual stock allocations.

Author holds positions in Apple, Eli Lilly, Microsoft, and Nvidia. The author or site may have positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The author has a disclosure policy.

investment, ETF, KenGriffin