SPDR S&P 500 Eyes 20th Birthday After Record ETF Flows

January 7th at 11:13am by John Spence

The oldest and largest U.S.-listed exchange traded fund, SPDR S&P 500 (NYSEArca: SPY), will turn 20 years old later this month after the overall ETF business saw record inflows for 2012.

The $133 billion ETF was launched on Jan. 22, 1993, according to manager State Street Global Advisors.

The S&P 500 portfolio ushered in a revolution in investing as total ETF assets in the U.S. have ballooned to nearly $1.4 trillion.

“ETFs now account for 13% of total ETF and mutual fund assets, excluding money market funds,” reports Morningstar analyst Michael Rawson. “ETF assets have more than doubled since the end of 2008, in part due to particularly strong flows into fixed-income ETFs. Taxable bond ETF assets hit $225 billion up from $53 billion four years ago.”

2012 was a banner year for ETF buying as $191 billion flowed in to top the previous record from 2008, according to Morningstar.

After two years of trailing Vanguard, BlackRock’s (NYSE: BLK) iShares took back the ETF flows crown with nearly $61 billion in 2012 flows, the investment researcher added.

However, SPDR S&P 500 ETF brought in more new cash than any other ETF, with $20 billion in flows, most of which came in December. “Due its hyper-liquidity and the ability to trade SPY at low costs, traders tend to use it to rapidly place market bets, so flows into SPY are a good barometer of market sentiment,” Rawson wrote.

In 2011, the S&P 500 briefly lost its title as the largest ETF to SPDR Gold Shares (NYSEArca: GLD), which is also managed by State Street (NYSE: BLK), when gold prices surged to all-time highs. GLD, the gold ETF, currently holds about $71 billion in assets. [Can Gold Fund Reclaim Title of World’s Largest ETF?]

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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