History of ETFs (2024)

FAQs

History of ETFs? ›

The first ETF was launched in Canada in 1990, which paved the way for the introduction of the first U.S. ETF, the SPDR S&P 500 ETF Trust, in 1993. Designed to offer investors the diversification of a mutual fund with the flexibility of stock trading, ETFs took time before they started to grow rapidly in popularity.

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.

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.

ETFs are less risky than individual stocks because they are diversified funds. Their investors also benefit from very low fees. Still, there are unique risks to some ETFs, including a lack of diversification and tax exposure.

2001: Vanguard brings cost competition to the ETF market

The first one available was Vanguard Total Stock Market ETF, which began trading on the American Stock Exchange. When we entered the ETF market in 2001, our unique approach lowered costs for investors.

The SPDR S&P 500 ETF Trust (SPY) seeks to track the performance of the S&P 500 index, which is a cap-weighted basket of the largest publicly traded companies in the U.S. SPY is the oldest ETF listed on a U.S. exchange and is the largest ETF as measured by AUM.

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.

Who invented Qqq? ›

Invesco QQQ (best known by its ticker symbol, QQQ; full fund name Invesco QQQ Trust, Series 1), is an exchange-traded fund created by Invesco PowerShares.

Jim WiandtFounder & CEO

Jim Wiandt is founder of etf.com and ETF Report.

The largest Active Management ETF is the JPMorgan Equity Premium Income ETF JEPI with $33.36B in assets. In the last trailing year, the best-performing Active Management ETF was CONL at 527.30%. The most recent ETF launched in the Active Management space was the REX AI Equity Premium Income ETF AIPI on 06/04/24.

ETFs are designed to track the market, not to beat it

But many ETFs track a benchmarking index, which means the fund often won't outperform the underlying assets in the index. Investors who are looking to beat the market (potentially a riskier approach) may choose to look at other products and services.

Because the ETF is a separate legal entity from the issuer that manages it, the ETF will control all the assets in its portfolio up until the date set for its liquidation, at which point the manager will sell the assets and distribute the proceeds to investors.

The single biggest risk in ETFs is market risk.

The first active ETF was launched in 2008. Since then, a lot of innovation has happened in the active ETF market. There are now 19 ETF issuers offering active ETFs – a number that has tripled over the last five years.

Most ETPs are structured as ETFs, which are registered with and regulated by the SEC as investment companies under the Investment Company Act of 1940. ETFs generally focus their investments in stocks or bonds and have diversification requirements.

In 2008, ETFs experienced total cash inflows of approximately $160 billion, with much of the action occurring in the back half of the year when fear trumped greed and markets went into panic mode.

The SPDR® S&P 500® ETF (SPY), a basket of securities tracking the performance of the S&P 500® Index, made its debut in 1993 as the first US-listed ETF.