• September 20, 2021

History of ETFs

Exchange-traded funds (ETFs) have an interesting history here in the US and around the world. Beginning in 1989 as Index Participating Shares, a representation of the S&P 500, they were traded on the United States Stock Exchange and the Philadelphia Stock Exchange. After the start, the Chicago Mercantile Exchange filed a successful lawsuit to stop all sales in the US.

A similar product called the Toronto Index Participation Share began trading on the Toronto Stock Exchange in 1990. With a very rapid rise in popularity, stocks followed the TSE 35 and then the TSE 100. With that success, the Toronto Stock Exchange The United States created a product for the United States.

In January 1993 Nathan Most, an executive at the stock exchange, created Standard & Poor’s Depositary Receipts. Widely known as SPDR or “Spiders”, the fund became the largest in the world. MidCap SPDRS were introduced to the market soon after, in May 1995.

Barclays Global Investors, a subsidiary of Barclays pls entered the mix in 1996 with World Equity Benchmark Shares, or WEBS, which soon after was renamed iShares MSCI Index Fund Shares. This fund was very innovative due to its ease of use for the everyday investor to invest in the foreign market. The SPDRs were established as unit investment trusts, while the WEBS, being the first of their kind, were established as mutual funds.

In 1998, State Street Global advisers introduced “Sector Spiders” to the market. The “sector spiders” were created to track the nine sectors of the S&P 500. Introduced in 1998, “Dow Diamonds” tracked the Dow Jones Industrial Average.

Since then, ETFs have multiplied and reached a variety of sectors, commodities, regions, bonds, futures, and various other asset groups. There were more than 680 ETFs in the US as of May 2008. The assets of these 680 ETFs were $ 610 billion and were up $ 125 billion from the previous 12 months.

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