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SPY@20: You've Come A Long Way Baby

By
Jim Wiandt
January 29, 2013
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SPY, the ETF that started it all, receives a 20th birthday greeting from IU Founder and Chief Executive Officer Jim Wiandt.

Editor’s Note: This blog is part of a “SPY@20” series of pieces IndexUniverse is rolling out to commemorate the 20th anniversary of the first U.S.-listed ETF. The package will include a number of interviews with industry sources as well as blogs from IndexUniverse senior executives. The stories that have run so far include the following:

 

It’s hard to believe it’s been just 20 years.

Conceived by Nate Most, codified by Kathleen Moriarty, launched on the Amex by Jim Ross and the team at State Street Global Advisors and then traded—and traded—by Gary Eisenreich and others, it was a slow start for the now-mighty SPDRs Trust.

It took three years until the fund, the SPDR S&P 500 ETF (NYSEArca: SPY) hit its first billion dollars in assets, but there’s been no looking back since.

These numbers, from humble beginnings to the biggest ETF in the world, tell the tale of SPY perfectly.

Year

Net Flows ($,M)

AUM Period End ($,M)

1993

442.75

461.54

1994

-18.73

422.56

1995

401.92

1,001.06

1996

762.10

2,008.16

1997

2,748.97

5,514.84

1998

4,531.43

12,172.94

1999

5,187.94

19,742.62

2000

8,442.03

25,480.17

2001

8,861.82

30,440.04

2002

16,318.79

39,274.71

2003

-5,351.28

43,148.54

2004

8,408.57

55,536.10

2005

828.14

57,789.72

2006

-1,514.71

63,996.07

2007

31,960.84

98,155.30

2008

35,484.66

93,922.12

2009

-20,066.66

84,907.97

2010

-3,848.26

89,875.02

2011

6,156.46

95,397.37

2012

15,767.39

123,000.83

2013 YTD

-2,695.12

126,986.56

 

SPY has gone from a spark in the mind’s eye of Nate Most to becoming not just the world’s largest ETF, but the highest trading U.S.-listed equity, period.

A snapshot look at yesterday shows that SPY traded 113 million shares, to Intel Corp.’s (NasdaqGS: INTC) 105 million shares. Also, INTC is valued at $21 to SPY’s $150.

In a word, wow! You’re not the cute little “Spidy” I remember.

SPY was the first ETF of all of them in the United States, and ETFs have changed the way investors invest and the way investors view the market—forever.

Increasingly, investors have come to think of the market in terms of exposures and risks, instead of market inefficiencies that savvy managers can exploit to make money.

The success of ETFs and of index funds is a fundamental recognition of the fact that the overwhelming majority of returns are driven by what exposures to the market you take on—beta, not alpha on the margins. Indeed, markets are by definition a zero-sum game.

For every winner there is a loser.

But the market generally—though not always, as most of us are acutely aware—goes up, and if you can manage to own a diversified portfolio that captures your desired level of risk, and do that at minimum cost and maximum efficiency, you’re going to be ahead of the overwhelming majority of other investors.

And SPY is at the center of it all.

In short, as an investor, I love the ETF revolution and everything it stands for.

Thank you SPY, for kicking it all off, and HAPPY BIRTHDAY!

 

ETF DAILY DATA

The consumer discretionary fund 'XLY' garnered a $1 billion-plus blast of creation on Tuesday, March 3. Still, a falling market offset net inflows and pulled total U.S.-listed ETF assets down to $2.092 trillion.

'VCR,' the consumer discretionary fund, paced Vanguard's issuer-leading inflows on Tuesday, March 3, as total U.S.-listed ETF assets ended the day at $2.092 trillion.

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