Key Takeaways
- VOO has crossed the $1 trillion asset mark, adding roughly $386 billion in net inflows over the past three years and about $50 billion in the last month alone.
- The S&P 500 is trading near its all‑time high (~7,430), up roughly 17% since April 1 after a brief dip to 7,620 on June 2.
- The Shiller CAPE (cyclically adjusted price‑to‑earnings) ratio sits at 41, the highest level since the dot‑com boom and above the reading that preceded the 2022 bear market.
- Historically, CAPE ratios at this level have been followed by market corrections or bear markets, signaling a need for caution despite the current rally.
- While VOO remains a core, low‑cost holding for most portfolios, investors may want to balance exposure with defensive or dividend‑focused ETFs such as WisdomTree U.S. High Dividend ETF (DHS), which outperformed the S&P 500 in 2022 and is up 13% year‑to‑date.
- The Motley Fool’s Stock Advisor service highlights other individual stocks with higher expected returns than VOO, though The Motley Fool still recommends VOO as a staple ETF for long‑term investors.
The Vanguard S&P 500 ETF (ticker VOO) has become the world’s largest exchange‑traded fund, recently surpassing $1 trillion in assets under management. Over the last three years VOO has accumulated approximately $386 billion of net new money—more than one‑third of its total size—driven largely by the concurrent bull market in the S&P 500. In the most recent month alone, investors poured roughly $50 billion into the fund as the index climbed about 17% since April 1, reaching a level of 7,430 points, just shy of its all‑time high of 7,620 recorded on June 2.
Despite the strong inflows, several macro‑economic and valuation concerns suggest that the rally may be fragile. The article notes that the last time VOO experienced significant net outflows was in March 2026, coinciding with the outbreak of war in Iran and a subsequent dip in the S&P 500. Although the conflict continues, inflation is rising, consumer confidence remains subdued, the labor market shows mixed signals, and interest rates are elevated—conditions reminiscent of the early‑2026 slowdown that preceded a market pullback.
The most striking warning sign is the Shiller CAPE ratio, which measures the S&P 500’s price relative to its average inflation‑adjusted earnings over the past ten years. The CAPE now stands at 41, its highest level since the dot‑com bubble of 1999 and even above the reading observed in October 2021, shortly before the 2022 bear market. Historically, when the CAPE has climbed into this range, a correction or bear market has followed. While past patterns do not guarantee a repeat, the elevated valuation warrants that investors stay alert to the possibility of a near‑term downturn.
Given these risks, the piece suggests that VOO should still be considered a foundational holding for most investors because of its broad market exposure, low expense ratio, and tax efficiency. However, rather than piling additional capital into VOO at current levels, a prudent approach may be to diversify into strategies that have shown resilience during market stress. One example highlighted is the WisdomTree U.S. High Dividend ETF (ticker DHS), which tracks a proprietary index of stocks expected to deliver the highest dividend yields. In 2022—a year when the S&P 500 fell roughly 19%—DHS gained about 8%, and it is currently up 13% year‑to‑date, outperforming the broad index. Adding a dividend‑focused ETF like DHS can provide income and potentially lower volatility if the market turns.
The article also references the Motley Fool’s Stock Advisor service, which recently published its list of the ten best stocks to buy now. VOO did not make that cut; the service argues that its selected individual equities have the potential to generate outsized returns compared to the ETF. For context, the newsletter notes that a $1,000 investment in Netflix when it appeared on the list in December 2004 would have grown to over $433,000, and a similar stake in Nvidia from April 2005 would now be worth more than $1.2 million. Stock Advisor’s historical average return of 935% far exceeds the S&P 500’s 207% gain over the same period, underscoring the service’s confidence in its stock picks. Nevertheless, The Motley Fool discloses that it holds a position in and recommends VOO, and the author of the piece, Dave Kovaleski, reports no personal stake in any of the mentioned securities.
In summary, VOO’s meteoric rise to $1 trillion in assets reflects strong investor appetite for low‑cost S&P 500 exposure, but the combination of elevated valuations (Shiller CAPE = 41), lingering geopolitical tensions, and mixed economic indicators suggests caution. Investors may wish to keep VOO as a core holding while considering complementary, defensive strategies—such as dividend‑oriented ETFs like DHS—to cushion potential market declines. The Motley Fool’s Stock Advisor highlights alternative individual stocks with higher return expectations, yet VOO remains a widely endorsed staple for long‑term, diversified portfolios.