It was 20 years ago today, State Street Global launched the ETF. (Sung to the tune of
Sgt. Pepper’s Lonely Hearts Club Band.)
On January 29, 1993, the first exchange traded fund, called the Standard & Poor’s Depositary Receipt, began trading on the American Stock Exchange. With the abbreviation SPDR, the product was immediately nicknamed “the spider.” The Amex created the product, then called an “index tracking stock,” with State Street’s logistical help, as a way to increase trading volumes on the dying exchange. The first day the SPDR traded one million shares. Not a bad total for that time period. However, a month later trading volumes had shrunk to 19,500 a day and within three months volumes had fallen so low the Amex considered delisting it.
The Amex is now dead and gone, but its legacy lives on as a huge success and flagship of a revolution in investing. Renamed the SPDR S&P 500 (SPY), the Spider is now the largest fund of any kind in the world, with net assets of $123 billion and average daily volume of 144 million shares.
State Street Global Advisors celebrated the 20th anniversary of its product Tuesday with a panel discussion about the present state and future of the industry it helped start.