The primary ETF is 30 years previous this week. It introduced a revolution in cheap making an investment

Photo of author


(An excerpt from the book, “Shut Up and Keep Talking: Lessons on Life and Investing from the Floor of the New York Stock Exchange,” by Bob Pisani.)

Thirty years ago this week, State Street Global Advisors launched the Standard & Poor’s Depositary Receipt (SPY), the first U.S.-based Exchange Traded Fund (ETF), which tracked the S&P 500. 

Today, it’s known as the SPDR S&P 500 ETF Trust, or just “SPDR” (pronounced “Spider”).  It is the largest ETF in the with over $370 billion in under management, and is also the most actively traded,  routinely trading over 80 million shares daily with a volume north of $32 billion every day. 

SPDR Gold Shares, symbol GLD) went public.  It represented a quantum leap in making gold more widely available. The gold was held in vaults by a custodian. It tracked gold prices well, though as with all ETFs there was a fee (currently 0.4%). It could be bought and sold in a brokerage account, and even traded intraday.

CNBC’s Bob Pisani on the floor of the New York Stock Exchange in 2004 covering the launch of the StreetTRACKS Gold Shares ETF, or GLD, now known as the SPDR Gold Trust.

Source: CNBC

Staying in low-cost, well-diversified funds with low turnover and tax advantages (ETFs) gained even more adherents after the Great Financial Crisis in 2008-2009, which convinced more investors that trying to beat the markets was almost impossible, and that high-cost funds ate away at any market-beating returns most funds could claim to make.

ETFs: poised to take over from mutual funds?

After pausing during the Great Financial Crisis, ETF assets under management took off and have been more than doubling roughly every five years.

The Covid pandemic pushed even more money into ETFs, the vast majority into index-based products like those tied to the S&P 500.

From a measly 80 ETFs in 2000, there are roughly 2,700 ETFs operating in the U.S., worth about $7 trillion.

The mutual fund industry still has significantly more assets (about $23 trillion), but that gap is closing fast.

 “ETFs are still the largest growing asset wrapper in the world,” said Tull, who has built ETFs in 18 countries. “It is the one product regulators trust because of its transparency. People know what they are getting the day they buy it.”

 Note: Rory Tobin, Global Head of SPDR ETF Business at State Street Global Advisors, will be on Halftime Report Monday at 12:35 PM and again at 3 PM Monday on ETFedge.cnbc.com.

See also  Elon Musk says a Chinese language automaker will be moment to Tesla: 'They paintings the neatest'