ETF Pioneer Jim Ross On Legacy, Lessons Learned

December 06, 2019

When asked about how he got involved with the creation of the first U.S.-listed ETF, the SPDR S&P 500 ETF Trust (SPY), Jim Ross once jokingly told me that he was just the young guy in the room there to deliver coffee; he was simply at the right place at the right time.

Luck probably had very little to do with his impressive trajectory in this business. Ross helped the American Stock Exchange develop and launch SPY, and he went on to play a major role in the growth of the ETF industry for nearly 28 years at the helm of State Street Global Advisors’ ETF business. (He was the ETF.com Lifetime Achievement Award winner in 2016.)

Now, he’s ready to enjoy the fruits of his labor, and step away from an industry that has meant so much to him. Come March 2020, Jim Ross is retiring.

While at State Street, SPY was just the beginning. Other milestone accomplishments Ross can count include the Select Sector SPDRs—the most traded U.S. sector vehicles on the market today; the first physical gold ETF—and still the largest—the SPDR Gold Trust (GLD); a pioneering gender-diversity-focused ETF, the SPDR SSGA Gender Diversity Index ETF (SHE) that will forever be associated with the global phenomenon that became the “Fearless Girl.” The list goes on.

ETF.com: You were there when the first U.S.-listed ETF “SPY” was created. You helped bring the first gold ETF “GLD” to market. When you look back at your 25-plus years in ETFs, what are you most proud of?

Jim Ross: That's a really hard question. I'm most proud of just how the product has grown to transform the way people invest. ETFs have helped deliver better outcomes for investors.

That's pretty cool to look back and say, “Yeah, 27 years ago it cost 2-5% to do this, and now we're doing it and delivering it for a few basis points.” ETFs are tried and true, well-structured, and have worked through good times and bad. Every once in a while I still hear people say, "Well, they haven't really been tested." I'm like, what other tests do you need?

I’m also really proud of the global growth. GLD had its 15th anniversary in New York a couple of weeks ago. I was recently in Hong Kong celebrating the 20th anniversary of the Tracker Fund of Hong Kong (TraHK), which is another first I worked on. ETFs are hitting milestones everywhere.

ETF.com: We talk a lot about how ETFs democratized access, they improved index tracking, they lowered costs for investors around the globe. Is there a spot where you still see friction that needs to be addressed?

Ross: I'm not sure it's friction as much as it’s a need. As we continue to see the expansion of ETFs into what comes next—like nontransparent ETFs—we need to continue to educate. We’re looking at thousands of ETFs. We need to make sure, as an industry, we’re doing a good job educating investors on their differences. There's still a lot to be done as products evolve and grow.

ETF.com: What’s the next big frontier for ETFs, or the next disrupter?

Ross: The real challenge is that the next disrupter's probably already out there, but you don’t know it until you get there. It could be something that we're thinking of today; it could be in adjacency to ETFs; or it could come completely out of left field.

What I can say is that we’ve seen technology continuing to evolve, and that’s been a real boost to the growth of ETFs. One of the challenges is going to be continuing to make ETFs relevant in the future, and technology innovation may play a role in that.

ETF.com: As you retire, is there anything you feel was left undone or unfinished?

Ross: There's still a lot of innovation left. There's plenty to be done, especially in the fixed income area. There’re more areas for exploration. We’re also talking about the first nontransparent active ETF, which hasn't launched yet. There's still plenty to go.

ETF.com: What are some of the biggest lessons you've learned in your time with ETFs?

Ross: I was young when I got involved with this, so I’ve learned a lot. I learned to be patient, that not everything can be done overnight, whether that's going through a regulatory process, or figuring out an organizational process. There're times when you want to move as fast as you can, and you do, but there’re times when you want to make sure you have everything ready to go before moving forward. Patience is key.

I've always believed in the mantra, “Treat everyone equally and that will pay off for you in the long run.” I continue to think this is the right way to go.

You want to make sure you're building the industry and not just trying to selfishly look out for your own self-interests. That's one of the reasons I've spent so much time working on what I call “broader industry things” with the ICI's ETF committee and other industry groups. Because I think it's important that you try to grow the entire pie. Yes, you're obviously fighting for your own slice, but I don't think those things should be mutually exclusive.

ETF.com: As you retire, I can't help but think about legacy. It’s a big word. What do you think is going to be yours?

Ross: It's the furthest thing from my mind. To me, legacy is something somebody else figures out for you. I'm proud and excited for what we've done in this industry. I was involved in SPY, but I was involved in a very small way. Everyone is like, "Oh, your legacy is SPY." My legacy should not be SPY.

I have helped launch many of the world's first ETFs outside of SPY, including in Hong Kong and in Australia. But I'm not big on thinking about legacy. I'm retiring. And I'm not that old. I'm just getting out young.

ETF.com: How “young” are you? I'm curious.

Ross: I'm 54. State Street has a great policy around early retirement at 55, so, as you can imagine, I have that coming up in the near future.

ETF.com: That's awesome. I want to be like you when I grow up!

Ross: It’s funny. Some of the people I'm talking to say, "How can you do this?" I've had the benefit of some success. My wife and I do not have children, which makes it a lot easier. I don't have four kids in college [laughter]. That gives me the opportunity to do this. I hope I have a long life post-SSGA, but I also can reflect on the fact that I lost my father at 59. So, if I only have four years left, I don't want to be on a plane. I obviously hope I have a lot longer.

ETF.com: What’s your next chapter?

Ross: Will I stay engaged in the industry at some level? I hope to. But I don't know at this point what that looks like. I'm not even going to think about that. My end date is March 31, 2020, and my guess is, I'll start thinking about that maybe in September 2020.

ETF.com: What will you miss the most about working day-to-day with ETFs?

Ross: I'm sure I'll miss the engagement—the team environment engagement, the client engagement. I'll definitely miss that. I've worked with some fabulous people over the years that I have truly, truly enjoyed.

ETF.com: Any piece of advice you want to leave for those taking up the ETF torch?

Ross: My shortest answer would be, don't screw it up. Beyond that, my advice is, make sure if you're trying to break into this industry and bring in a new product, have a plan. Figure out how to raise the first assets and have a comprehensive strategy around it.

One thing I think is really true today in ETFs is that there're some good ideas that never get heard because people don't have a full plan behind it. The days of launching something and hoping you're going to get traction may have existed 15, 20 years ago; they don't exist anymore. Make sure you have a comprehensive strategy for marketing and selling your product and educating investors as to why they should be buying it.

But mainly, just don't screw it up.

Contact Cinthia Murphy at [email protected]

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