SPDR S&P 500 Marks Two Decades of ETF Growth
January 16th 2013 at 12:35pm by Tom Lydon
The exchange traded fund industry is celebrating 20 years in business. The SPDR S&P 500 ETF (NYSEArca: SPY) is also hitting this milestone, as it was the first ETF to trade.
“SPY ended 2012 with $123 billion in assets, including nearly $16 billion in 2012 alone. Over 147 million shares of SPY tarde on average daily and the ETF serves as a proxy for U.S. equity exposure for many institutional and retail investors. This ETF, the first one in the U.S., launched on January 22, 1993,” S&P Capital wrote in a recent note. [SPDR S&P 500 Eyes 20th Birthday After Record ETF Inflows]
SPY has earned a top “Overweight” ranking from S&P Capital, with positive ranking inputs on six of ten factors measured. Since SPY is market-cap weighted, the largest U.S. mega-caps make up 19.5% of the portfolio. The 0.11% expense ratio, tight bid/ask spread and solid earnings and dividends make this fund appealing to just about every investor.
Other ETFs that track the S&P 500 include iShares S&P 500 Index Fund (NYSEArca: IVV) and Vanguard S&P 500 ETF (NYSEArca: VOO), among others. However, none come close to the popularity and success of SPY. SPY traded on average about $18 billion worth per day in 2012, reports Chris Flood for Financial Times. [A Closer Look at Three S&P 500 ETFs]
SPY gives investors broad-based, affordable exposure to some of the largest U.S.-listed companies, with higher weights going to the most valuable. Individual equities that competed with ETFs for value include Apple (NasdaqGS: AAPL), Google (NasdaqGS: GOOG), Microsoft (NasdaqGS: MSFT), Bank of America (NYSE: BAC) and Citi (NYSE: C). All of these companies are holdings in SPY. [S&P Ranks Largest ETF Managers]
Over the past 20 years the industry has grown to about 750 equity ETFs trading with about 200 fixed-income funds trading as well as a bevy of commodity, currency and leveraged ETFs, and fixed-income. [Surveying S&P 500 ETFs]
SPDR S&P 500 ETF
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own SPY.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.