On Sunday, a select few of us in the ETF industry will be toasting the 30th anniversary of the SPDR S&P 500 ETF (SPY), the first U.S.-listed and still-largest ETF. However, millions of Americans will unknowingly be among the beneficiaries of the major milestone.
The first ETF began trading in Canada in 1990, but most will agree that the birth of SPY on January 22, 1993, helped propel the ETF industry’s global growth. While it took some time and weakness in the financial markets for ETFs to become mainstream, there is now approximately $7 trillion in assets spread across more than 3,000 U.S. ETFs, aided by back-to-back impressive years of net inflows. Many advisors have built strategies using only ETFs, and there is a collection of experienced and passionate VettaFi Voices eager to help them.
VettaFi is going to have a proper celebration with more than 1,000 of our closest financial advisors and ETF industry friends in a few weeks at Exchange in Miami. But I asked Matt Bartolini, head of SPDR Americas Research, to share some statistics about SPY, which remains the granddaddy of all ETFs. Here are some of my favorites as well as some perspective from me on the data:
- SPY has had $110 trillion of total trading volume since inception.
- SPY recently had $372 billion in assets. While many buy and hold SPY, the ETF is frequently used for shorter-term purposes.
- SPY traded more than $9.7 trillion in 2022, making it the most traded ETF. SPY accounted for 21% of the record U.S. ETF volume.
- SPY’s total trading volume in 2022 was 15 times more than that of the iShares S&P 500 ETF (IVV) and 18 times more than that of the Vanguard S&P 500 ETF (VOO).
- Over the last five years, VOO, IVV, and the SPDR Portolio S&P 500 ETF (SPLG) had net inflows of $134 billion, $79 billion, and $13 billion respectively, while SPY had $16 billion of net outflows.
- SPY’s net expense ratio of 0.09% is three times that of these ETFs. Despite losing some market share at the asset level, SPY remains the go-to vehicle for many.
- SPY, on average, trades more than its top seven index constituents combined, including Apple, Amazon.com, and Microsoft.
- While what is inside the ETF is the driver of its performance, there is tremendous liquidity in the basket of stocks in the S&P 500.
Over the last three decades, the ETF industry has provided investors, large and small, with many additional ways to access financial markets we take for granted. Some of these are the offspring for SPY, and it is a lineage worthy of pride.
For example, there is a wide range of ETFs tied the S&P 500 Index, including sector-focused funds like the Technology Select Sector SPDR (XLK), style-oriented funds like the iShares S&P 500 Growth ETF (IVW), factor-based funds like the Invesco S&P 500 Low Volatility ETF (SPLV), ESG-screened funds like the Xtrackers S&P 500 ESG ETF (SNPE), and many more.
Meanwhile, thanks to SPY, investors can gain access to international equity markets that are closed for the day when the ETF trading in the U.S. occurs, including funds like the KraneShares CSI China Internet ETF (KWEB) and the WisdomTree India Earnings Fund (EPI).
For those wanting to outperform SPY, despite the challenges, there are now hundreds of actively managed ETFs to consider, including many from firms long associated with the mutual fund world, such as ETFs like the American Century Focused Large Cap Value ETF (FLV) and the T. Rowe Price Blue Chip Growth ETF (TCHP). Indeed, it is hard to think of an asset management firm that does not have an ETF presence.
Not to mention that ETF investors get the benefits of trading on an exchange a portfolio of securities like high yield bonds (through funds like the SPDR Bloomberg High Yield Bond ETF (JNK)), gold (through an ETF like the SPDR Gold Shares (GLD)), and even ones investing in futures like the iMGP DBi Managed Futures Strategy ETF (DBMF).
I could list ETF innovations from now until SPY turns 30 years old. But I want to get ready to celebrate, and you should too.
To learn more about the event and register, please visit the Exchange website.