What was the first ETF?
Traders started to look for ways to purchase all the components of an index in a single trade. A solution came in 1993 with the launch of the first ETF in the United States, the SPDR SPY which, to this day is possibly the most well-known ETF in the world.
When was SPY created? SPY was created on January 22, 1993. It was the first US ETF to be listed on a national stock exchange, and it remains the most widely traded ETF in the world.
The world's first ETF was created in Canada in 1990, transforming the investment landscape and offering the advantages of pooled investing and trading flexibility. In their early days, ETFs were used primarily by institutional investors to execute sophisticated trading strategies.
The very first ETF — the SPDR S&P 500 ETF Trust — debuted in 1993, but it took another 15 years before the first actively managed ETF reached the market. After the 2008 Bear Stearns debut, other firms quickly followed suit.
Born Out of Crisis, SPY Changed Investing Forever. Fast-forward to January 1993. A group of financial executives ring the opening bell at the American Stock Exchange (AMEX), officially launching the first US-listed exchange traded fund (ETF).
- SPY - $501.50 billion.
- IVV - $450.03 billion.
- VOO - $420.71 billion.
- VTi - $380.70 billion.
- QQQ - $258.64 billion4.
| Symbol | Name | 5-Year Return |
|---|---|---|
| GBTC | Grayscale Bitcoin Trust | 68.72% |
| USD | ProShares Ultra Semiconductors | 58.14% |
| FNGU | MicroSectors FANG+™ Index 3X Leveraged ETN | 51.32% |
| FNGO | MicroSectors FANG+ Index 2X Leveraged ETNs | 48.22% |
| Symbol Symbol | ETF Name ETF Name | Inception Inception |
|---|---|---|
| XBI | SPDR S&P Biotech ETF | 2006-01-31 |
| IBB | iShares Biotechnology ETF | 2001-02-05 |
| ARKG | ARK Genomic Revolution ETF | 2014-10-31 |
| LABU | Direxion Daily S&P Biotech Bull 3x Shares | 2015-05-28 |
Exchange traded funds, or ETFs, were first developed in the 1990s as a way to provide access to passive, indexed funds to individual investors. Since their inception, the ETF market has grown enormously and are now used by all types of investor and trader around the world.
The history of QQQ, Invesco QQQ Trust, is that it was a game-changer from the very start. Beginning in 1999 with the development of the Nasdaq-100 index by John Jacobs then a Nasdaq executive and now a professor at Georgetown and Steven Bloom, his index expert, the product was an overnight success.
What are the top three ETFs?
| Symbol | Name | AUM |
|---|---|---|
| SPY | SPDR S&P 500 ETF Trust | $535,541,000.00 |
| IVV | iShares Core S&P 500 ETF | $454,120,000.00 |
| VOO | Vanguard S&P 500 ETF | $435,214,000.00 |
| VTI | Vanguard Total Stock Market ETF | $389,092,000.00 |
ETF Inventor Nate Most's Keys:
Inventor of the ETF structure, arguably the most important financial innovation of modern times. Created the first and still-largest ETF, the SPDR S&P 500 Trust.
Direxion launched its first leveraged ETFs in 2008. In November 2008 the company was the first to offer ETFs with 3X leverage, a move that was copied some months later by its competitors ProShares and Rydex Investments.
The SPDR S&P 500 ETF Trust (SPY) was launched in January 1993, making it the first ETF to trade on the U.S. market.
Vanguard founder Jack Bogle had launched the first index fund, the Vanguard 500 Index Fund, 17 years before, in 1976.
On August 31, 1976, The Vanguard Group offered the first mutual fund to retail investors that tracked the index. On April 21, 1982, the Chicago Mercantile Exchange began trading futures based on the index.
The largest Aggressive ETF is the iShares Core Aggressive Allocation ETF AOA with $1.86B in assets. In the last trailing year, the best-performing Aggressive ETF was AOA at 21.42%. The most recent ETF launched in the Aggressive space was the iShares ESG Aware Aggressive Allocation ETF EAOA on 06/12/20.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
The largest BlackRock ETF is the iShares Core S&P 500 ETF (IVV).
MarketWatch spotlights VanEck Morningstar Wide Moat ETF (MOAT), consistently outperforming the S&P 500 by targeting companies with long-term competitive advantages or "economic moats."
Why not invest in ETF?
Market risk
The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.
| Symbol | Name | Expense Ratio |
|---|---|---|
| PBDC | Putnam BDC Income ETF | 6.79% |
| YYY | Amplify High Income ETF | 4.60% |
| RTAI | Rareview Tax Advantaged Income ETF | 3.78% |
| RDFI | Collaborative Investment Series Trust Rareview Dynamic Fixed Income Fund | 3.69% |
| FUND(TICKER) | EXPENSE RATIO | 10-YEAR RETURN AS OF MARCH 1 |
|---|---|---|
| Invesco QQQ Trust (QQQ) | 0.20% | 17.66% |
| Vanguard Growth ETF (VUG) | 0.04% | 13.97% |
| iShares Russell 1000 Growth ETF (IWF) | 0.19% | 14.66% |
| iShares S&P 500 Growth ETF (IVW) | 0.18% | 13.16% |
SPDR is an acronym for the Standard & Poor's Depositary Receipts, the former name of the ETF. It is designed to track the S&P 500 stock market index. This fund is the largest and oldest ETF in the USA. SPDR is a trademark of Standard and Poor's Financial Services LLC, a subsidiary of S&P Global.
Launched in March 1999, the Invesco QQQ ETF (QQQ) was the first ETF to begin tracking the NDX. As of September 20, 2022, QQQ had $159.39 billion in assets under management (AUM). Launched in October 2020, the Invesco QQQ ETF (QQQM), known as the Q mini, also tracks the Nasdaq-100.
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