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 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. 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. 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. 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.

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